Zimpapers profits up 68%

ZIMBABWE'S biggest diversified media group, Zimbabwe Newspapers (1980) limited's profit for the year ended December 31, 2018 surged 68 percent to US$3,8 million compared to US$2,4 million recorded in the prior year.

This comes despite a challenging environment in which companies' ability to generate advertising dollars was constrained on the back of weakening disposable incomes. Low incomes also had a negative effect on readers' ability to buy newspapers.

The introduction of online radio stations on the market has also increased competition for the broadcasting business while the looming introduction of community radio stations will pose more competition.

Zimpapers operates several radio broadcasting stations among them Star FM, Capitalk and Diamond FM.  Gross profit rose 8 percent to US$28,1 million from US$26,1 million on the back of revenue growth.

Resultantly, gross profit margins improved to 34,6 percent compared to 33,3 percent in the prior comparable year. Earnings per share jumped 60 percent to US0,66 cents. Revenue for the year jumped 10 percent to US$43 million compared to US$39,1 million buoyed by a 42,5 percent growth in the commercial printing division following improved capacity utilisation.  

The division also commissioned an exercise book printing machine, as the group consolidates its market position.

As a result, the division recorded US$7,9 million in revenue driven by increased product demand and an after tax profit of US$1,2 million, representing a 23,3 percent growth on prior year. Operational costs rose 3,5 percent to US$23,1 million.  

Group chairman Mr Delma Lupepe attributed the increase in operating costs to high administration costs as the group re-launched Typocrafters and increased capacity at ZTN as well as the Radio Broadcasting Division. Zimpapers also revived BoldAds, which, together with Typocrafters had been shutdown a few years back due to product obsolescence and operational viabilities.

"These companies have been re-modelled and refreshed to be able to compete in today's highly technological operating environment," said Mr Lupepe in a statement accompanying the group's financials.

An investment of US$4,5 million in capital expenditure was therefore made as efforts to equip the business and enhance efficiencies. At US$8,2 million, earnings before interest, tax, depreciation and amortization (EBITDA) was 19,5 percent above prior year's US$6,8 million.

Resultantly, profit before finance charges and exchange loss and tax increased 29,7 percent to US$5,8 million. Assets marginally grew to US$38,97 million from US$38,180 million.

Divisional operations, the Newspaper Division achieved at a 3,9 percent growth in revenue to US$29,5 million while its profitability jumped 27 percent to US$4,8 million on improved cost management.

The Broadcasting division had a 6,6 percent improvement in revenue performance to close the year at US$5,6 million on increased advertising volumes while its operating profit rose 19,6 percent.

The media industry has also been affected by the change in the country's functional currency during the first quarter of 2019. But management is upbeat of a recovery driven by increased efficiencies following improvements in digital infrastructure as well as the launch of ZTN.

"The company is in a new phase where the vision of becoming a fully integrated media house is now being realised as it expects to launch its television business in 2019. "The board and management is still optimistic of recovery and therefore performance for the year 2019 will be better than what was recorded in 2018," said Mr Lupepe.