Tawanda Musarurwa Senior Business Reporter
Zimbabwe’s largest diversified media group, Zimpapers, revenue for the six months to June 30, 2019 rose 63 percent to $32,9 million, from $20,2 million in the prior comparable period.
Despite the strong performance, the 63 percent revenue growth was below the official annual inflation rate of 175,66 percent, as the macro-operating environment remained challenging, curtailing the media group’s capacity to grow advertising revenue.
“The company could not increase either sales volumes or selling prices to match inflation owing to the liquidity challenges that were obtaining in the economy,” said chairman Tommy Sithole in a statement accompanying the company’s interims.
“Therefore, below inflation revenue growth was recorded across all the divisions, with a significant percentage growth being recorded in the commercial printing division,” Mr Sithole added.
Zimpapers’ gross profit margin improved to 67 percent from 64 percent in 2018. As a result, a 70 percent increase in gross profit to $22 million was recorded during the period under review.
But again these numbers were inflation-diluted. With the gross profit margin below inflation, operating costs were curtailed at $17 million. Operating costs jumped 57 percent from $10,9 million in the prior comparable period last year.
However, management focused on cost management to improve operating profit margins.
Resultantly, earnings before interest, tax, depreciation and amortization (EBITDA) grew by 97 percent to $6,8 million from $3,5 million previously.
The group recorded a 165 percent increase in net profit before tax to $5,7 million from the $2,1 million recorded in the same period in 2018.
Divisionally, the linchpin Newspaper division posted a 52 percent growth in revenue to $21,6 million from $14,1 million last year.
Operating profit for the division improved by 121 percent to $4,2 million compared to $1,9 million in the comparative period of 2018.
The commercial printing division recorded a 100 percent revenue growth to $7 million as a result of an increase in market share.
Its operating profit increased by 293 percent to $2 million compared to $0,5 million following optimisation of the division’s operating efficiencies and improved sourcing strategy.
The radio broadcasting division’s revenue improved by 58 percent to $3,5 million on the backdrop of market consolidation while operating profit increased by 212 percent from $0,2 million to $0,7 million on account of both revenue growth and better cost management.
Meanwhile, the fully integrated media group is steadily increasing its digital footprint as it seeks to remain a competitive entity.
In view of the quick and disruptive nature of technology on traditional media, the Zimpapers chairman said the group had adopted a web-first approach, with a special focus on breaking news and getting stories on the web as fast as possible, on a 24-hour-a-day, 7-days-a-week news cycle.
This has necessitated a consolidation of the group’s digital news platforms.
“Zimpapers has been consolidating its digital footprint to take advantage of the changing news consumption habits of audiences,” said Mr Sithole.
Going forward, the group is pinning profit growth on a number of internal strategies to drive profitability going forward.
“Performance of the company for the second half of the year is expected to be better than the first half as the company is working on revamping some of its products and making headway on new strategies.
“The board and management is focused at initiatives that improve the company’s product portfolio in the wake of disruptive innovations.
“Focus will remain on the digitalisation strategy and new projects as the company diversifies to broaden its revenue base,” said the chairman.