Zimpapers posts inflation exceeding intermediate results
The integrated news outlet, Zimpapers (1980) Limited, posted above-inflation financial results for the six-month period ended June 31, 2021 and plans to capitalize on disruptive innovation going forward.
The media group, which counts broadcasting, newspaper and commercial printing among its business divisions, achieved 538% revenue growth (in historical terms) exceeding the annual inflation rate for the period under review of 106.6%.
In inflation-adjusted terms, the Group has nonetheless managed to double its turnover after registering growth of 101% to 1,066 billion dollars against 530 million dollars compared to the previous year.
Of that revenue, the Newspapers division contributed $ 709 million after posting inflation-adjusted growth of 132%, up from $ 306 million compared to the previous year.
In line with improving revenue performance, the Newspapers division recovered from a reported loss position in 2020 to profit of $ 126.5 million.
The broadcasting division followed with a revenue contribution of $ 190.5 million after recording growth of 129%.
The division’s operating profit improved 441% to $ 10.3 million “due to better revenue performance and cost optimization.”
The commercial printing division was the worst performer but still recorded inflation-adjusted revenue growth of 18 percent to $ 166.4 million. The division’s profitability, however, was slightly lower at $ 2.2 million from $ 28 million last year, as costs grew at a faster rate than revenues.
Commenting on the overall performance, Group Chairman Mr. Tommy Sithole attributed the plausible revenue growth to volume and price recoveries recorded during the period under review.
Revenue growth translated into profit margins, with the company’s gross profit margin improving to 69% from 59% in inflation-adjusted terms.
Sithole said the gross profit margin improvements were the result of better revenue performance and cost optimization on raw material sourcing practices.
Costs as a percentage of revenue were reduced to 56% from 60% the previous year, despite the Group paying $ 21.1 million in finance costs, from $ 1.7 million the previous year.
The group has long-term loans of $ 70 million at a going interest rate of 45% per annum, payable over three years. Short-term borrowings amount to $ 35.6 million.
These cost reduction measures resulted in an improvement in EBITDA margins, in terms of hyperinflation, to 20%, compared to 17% compared to the previous year.
This helped the company reverse a pre-tax loss of $ 67.5 million into a pre-tax profit of $ 131.8 million.
This then spilled over into bottom line, with the group reporting 117% growth in inflation-adjusted after-tax profit to $ 98 million, from $ 45.1 million compared to the previous year.
Basic earnings per share in inflation-adjusted terms rose to 17.02 cents from 7.83 cents from the previous year.
However, the group did not declare a dividend but instead focused on reinvesting in the business ahead of the launch of ZTN and further capacitation of the commercial printing division where it aims to invest in a third. printing press.
Going forward, Sithole said the group will focus on strategic initiatives that will ensure the survival of the company.
This would be done through innovations and disruptive initiatives that improve the product portfolio in the wake of the Covid-19 pandemic.
âThe digitization strategy remains central to the operations and growth of the company due to the increasing demand for digital products in the country and around the world,â said Sithole.
Zimpapers also plans to go live on its TV channel before the end of the year in line with the requirements of the Broadcasting Authority of Zimbabwe (BAZ). – www.ebusinessweekly.co.zw.