Saturday, August 23, 2008

Grammy selling units to cut costs

Grammy selling units to cut costs

Losing or side projects on chopping block


GMM Grammy Plc (GRAMMY), the country's largest entertainment company, is restructuring its organisation by selling non-core and losing ventures to increase business efficiency.

Sirichai Tantiponganant, the chief financial officer of Grammy, said the strategy would help the company cut costs and have more effective management.

The company is ready to sell non-core and losing businesses to anybody who is interested.

Yesterday, Grammy reported that it has divested 51% of the paid-up capital in GMM Fitness Club to GMM Holding. GMM Media yesterday also divested a 29% stake to GMM Holding as well.

The company forecast that the merger process between the listed subsidiary GMM Media (GMMM) and the parent firm Grammy would be finalised in December.

Sumeth Damrongchaitham, Grammy's chief operating officer, said the merger would directly benefit stakeholders and investors because it would increase the company's free float as well as its market capitalisation to 6.8 billion baht from six billion baht now and this would attract more investors.

The company believes it can achieve its 2008 revenue target of eight billion baht after enjoying a strong performance in the first half of this year. It is also hopeful net profit will increase by 30% as many analysts projected.

In the first half, Grammy reported a net profit of 357 million baht on revenue of 3.69 billion baht, up from a net profit of 221 million baht and revenue of 3.42 billion in the same period last year.

In the second quarter, the company reported a net profit of 207 million baht on revenue of 2.02 billion baht, compared with a net profit of 137 million baht and revenue of 1.75 billion in the same period last year.

The net margin for the second quarter was 10%. The company is confident it can maintain the margin the rest of the year.

Mr Sumeth said the company would launch three concerts, two movies, and one musical stage performance in the remainder of the year.

The company will introduce one satellite TV channel with an investment cost of 50 million baht in the last quarter, he said.

The content will be related to music and entertainment.

In 2009, it will launch four new channels with investment cost of 150 million baht, said Mr Sumeth, adding that its subsidiary companies would offer some content to those channels.

In the event business, Mr Sumeth expects its subsidiary Index Event Agency will generate around 1.2 billion baht in revenue in the second half as it also has three big events on hand.

Grammy shares closed yesterday on the Stock Exchange of Thailand at 13.50 baht, up 20 satang, in trade worth 29.2 million baht.

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