Caxton & CTP Publishers & Printers’ share price gained a strong 9.7% to R12.22 on Friday after it reported a 4% rise in headline earnings a share to 196.1 cents for the year to June 30, and a big increase in cash resources.
Revenue was down 4.7% to R6.65bn, and profit from operating activities after depreciation and amortisation fell 11.4% to R657.9 million. Profit for the year fell 12.6% to R657.36m. Cash and its equivalents were up 32.7% to R2.51bn. The group’s market capitalisation on Friday stood at R4.15bn.
The ordinary dividend was maintained at 60 cents. The group publishes a number of regional community newspapers, The Citizen daily newspaper and one major magazine, as well as commercial printing, packaging, stationery manufacture and book printing.
“The group operations are well placed to capitalise on any uptick in consumer spending...should this not materialise, the group is fortunate that its balance sheet remains strong with significant cash balances to deploy should opportunities arise,” the group directors said about the prospects for the new financial year.
The group said the results were expected in the context of a difficult trading environment, where the decline in operating profits was to a large extent offset by insurance proceeds of R173.2m (2023: R118.2m) and net finance income of R237m (R134.2m).
Revenues, including a R176.1m loss of revenue relating to the sale of a business and closure of a subsidiary, declined by R327.3m.
The publishing and printing operations faced reduced throughputs and lower media advertising revenues, as national retailers cut spending to take account of the constrained consumer environment. The packaging businesses grew revenues.
“Overall margins were under pressure as competition in most markets intensified while the weighted average cost of raw materials increased relative to the prior year,” Caxton’s directors said.
Raw material pricing had stabilised, but with exchange rates at elevated levels, this placed pressure on margins that could not be fully recovered from customers.
Directors said that in the absence of revenue growth and facing declining margins, it was important to focus on cost containment. Staff costs fell by R49.8m (3.8%) and operating costs by R12m (1.1%).
This included the impact of a closed operation, the sale of a subsidiary and once off flood costs in the prior year. If these factors were excluded, the staff costs were flat and operating costs increased 6.2%, which was “a commendable achievement.”
Operating costs were impacted by large increases in electricity and water utility costs, but the electricity portion was mitigated by the savings from the solar rollout.
Profit from operating activities before depreciation and amortisation fell by R53.9m (5.5%), and after depreciation of R269.3m, profit from operating activities decreased by 11.4% to R657.9m.
The increase in net finance income of R102.8m (76.6%) was due to much higher cash balances. The lower earnings a share was as a result of a profit on disposal of a subsidiary (R79m) in the prior year, compared to a loss on disposal of an investment of R45.3m.
BUSINESS REPORT