Singapore Press Holdings, the city-state’s biggest newspaper publisher, said second-quarter profit dropped 13% after an economic recession hurt advertising revenue, reported Bloomberg.

Net income declined to $87 million, or 5 cents a share, in the three months ended Feb 28, compared with $99.6 million, or 6 cents, a year earlier, the company said in a statement to the Singapore stock exchange. Revenue fell to $287.2 million from $298.1 million.

Singapore’s worst recession on record is forcing companies to slow hiring and advertising spending, hurting the company’s core newspaper publishing business. Government data due tomorrow may show the economy shrank 9.6% last quarter, the fourth straight contraction, according to the median forecast of economists surveyed by Bloomberg News.

“The recession in Singapore is expected to last through 2009 and this would have a continued impact on advertisement revenue,” Chief Executive Officer Alan Chan said in the statement. “Our priority is to preserve resources, protect jobs, and position ourselves so as to emerge stronger when the economy improves.”

Earnings were reported after markets in Singapore closed. SPH shares rallied 3.2% to $2.89 today. They have plunged 36% in the past 12 months, compared with a 40% slump in the benchmark Straits Times Index.

Print ad sales fell 19% to $145.9 million last quarter, according to today’s statement. Operating expenses climbed 3% to $195.7 million, SPH said.

In October, the newspaper publisher raised prices for some of its newspapers, including its flagship English-language The Straits Times, for the first time in four years. The company said today newsprint costs jumped 24% in the quarter.

Earnings last quarter didn’t take into account savings from pay reductions. SPH lowered salaries for 3,000 employees from April 1 by as much as 10% and reduced bonuses amid a “sharp deterioration in business conditions,” the company said on March 12.

The cuts are expected to reduce its wage bill by 20%, SPH has said.