Volumes continuously recovering but pricing still a challenge: Piyush Gupta, HT Media

HT Media’s newsprint prices in the current quarter have averaged around Rs 66,000 per metric ton as against the same period last year, which was about Rs 42,000, Group CFO Piyush Gupta said during the Q2FY23 earnings call. Moreover, the Print ad revenue stood at Rs 269 crores at a 9% increase and on a sequential basis a 12% growth, he said.

Gupta further said that the circulation revenue was at Rs 61 crores, an increase of more than 21%. The growth was fuelled by both print order and realization per copy, and on a sequential basis, which was a 2% growth, said Gupta during the earnings call. Consequently, the company's operating revenue rose 10% to Rs 344 crores, and operating EBITDA stood at Rs 14 crores in the current quarter, with a -4% margin.

Speaking about the Group’s English business, which covers HT Media and Mint, Gupta shared that in Q2 FY23, the ad revenue stood at Rs 147 crores, which is a 10% rise on YoY basis and a 16% increase on a sequential basis. While the circulation revenue saw a rise of 118% on a y-o-y basis at Rs 15 crores, there was a rise of 19% on a sequential basis.

On the Hindi business, Gupta said that the ad revenue stood at Rs 122 crores, which is a 7% increase on a y-o-y basis, and an 8% increase on a sequential basis. Meanwhile, the circulation revenue was up 7% at Rs 47 crores on a y-o-y basis and a flattish to -2% decline on a sequential basis.

Talking about radio, Gupta said that there has been a considerable 36% y-o-y growth with revenue coming at Rs 33 crores versus Rs 24 crores same period last year. The operating EBITDA margin came into the positive territory of 3%. Meanwhile, digital has been flat, at -4% y-o-y with Rs 33 crores coming down to Rs 32 crores this quarter and operating EBITDA was marginally negative at Rs -2 crores with a -5% margin.

When asked about the losses that the group has incurred over a couple of quarters, Gupta shared that the losses are primarily for two reasons. “If you look at the EBITDA movement versus the same period last year, one is the elevated newsprint prices. Newsprint prices in the current quarter have averaged around Rs 66,000 per metric ton as against the same period last year was about Rs 42,000. So, you can see that's about a 50% increase in newsprint prices. That's purely the pricing delta. And in terms of rupee crore, that is a cost hit of about Rs 57 crores, which has gone into the P&L.”

He further said that the prices have already topped out and it's believed that after plateauing for some time, they would start coming down. “As you know, newsprint is a cyclical commodity. And I believe they are already hitting the peak at about USD 850-890 a metric ton”, he added.

Gupta also mentioned that in terms of dollars, the prices will come close to about USD 700 in the next couple of quarters. “Now, of course, as you would understand, the currency itself is a bit of a wildcard at this point in time because there's a 10% depreciation in the rupee. So, we will save about 25-30% in terms of dollar prices, but 10% of that will go away in the currency. I personally, therefore, believe looking at our inventory situation and where the newsprint prices are heading, that in the next couple of quarters, we would come out of the red, which is primarily because of the newsprint cost and the margins will therefore start improving”, he added.

Speaking on the revenue, Gupta also said that the volumes have been continuously recovering for the last two quarters, after some respite from the pandemic. However, pricing still remains a challenge. “So, the volumes are back to about 80-90%. In some markets of Hindi, they are actually above the pre-COVID level also. But pricing still is a big challenge, whereby market by market, we are anywhere between 70-90% of the pre-COVID prices.”

When asked if the group expects to surpass pre-COVID levels due to the widespread adoption of digital media, Gupta stated that the migration to digital or new-age media has been accelerated by the COVID-19 pandemic, but it is not a new phenomenon. “That has been happening for many, many years as more and more people adapt to new forms of media. As a result, we have a fairly robust Digital business, which is undergoing those changes.”

Gupta expressed hope and said they will be easily able to come to a very profitable situation. ”We don't speculate on the forward-looking forecast but suffice to say that the mere impact of the newsprint prices reverting back to media itself will have a very robust impact on the bottom line. And with pricing correcting in the marketplace, which is a factor of demand and supply, I think we can easily cross the pre-COVID levels without any questions.”