Tawanda Musarurwa, Harare Bureau
Zimbabwe’s largest diversified media group, Zimpapers (1980) Limited, surpassed its revenue and profitability targets for the first five months of the year, despite battling a significant exchange loss impact resulting from the change of functional currency earlier this year.
Zimpapers CEO Pikirayi Deketeke, told shareholders at the group’s annual general meeting yesterday that strategic focus had allowed the company to sidestep a number of macroeconomic challenges to perform ahead of targets.
For the five-months period to May 2019, the group’s revenue totalled RTGS$25,3 million, 34 percent above the set target of $18,8 million.
Revenue for the period under review was also 53 percent up from the prior comparable period.
“Despite the challenges that we have as an economy, the inflation and chasing the United States dollar our revenues are currently sitting at around $25,3 million and we have done better than budget, which was $18,8 million.
“Most of this money has been coming through from newspapers, which are still key. Commercial printing brought in $5,3 million, radio broadcasting $2,9 million, ZTN without a licence yet, contributing about $200 000, while the new baby BoldAds contributed $131 000,” he said.
In terms of profit for the period, the group is sitting at around $1,32 million against a budget of around $1,15 million, with the digital and publishing division contributing the bulk of the profits at RTGS$2,58 million.
However, overall profitability was weighed down by the exchange losses.
“Again, we see money coming from the digital and publishing division, which continues to hold fort, to be the anchor of the business. Commercial printing suffering from the Monetary Policy that was announced in February, we now have an exchange loss which is quite sizeable and is a bit of a threat to the business until we find a solution to cover our foreign creditors. Radio broadcasting is still standing strong at about RTGS$822 000,” said Mr Deketeke.
The CEO said although the various division’s revenue matrix shows the group is headed in the right direction, in terms of profitability the commercial printing division took a huge hit from the exchange loss in view of its strong foreign currency dependency.
“If you look at that revenue, broadcast revenue has gone up by 50 percent and then commercial printing has gone up by 82 percent, newspapers by 45 percent, which I think are interesting numbers. When you are tracking inflation or the parallel market rate we are in the right direction, we are not negative.
“Natprint to a large extent depends on imported raw materials to print its products, whether its beer labels, cartons and so on. So the cost of money is beginning to have a bearing on Natprint,” he said.
Zimpapers has invested heavily in radio broadcasting stations among them Star FM, Capitalk FM, Diamond FM and Nyaminyami FM and the division is starting to pay dividends.
The group is also expecting its television entity – Zimpapers Television Network (ZTN) – to follow the path of its radio division in contributing significantly to both revenues and bottom-line.
“But when you look at broadcasting, with a growth rate of 318 percent, which is radio, then newspapers with a growth rate of 80 percent, so it’s clear where the new money is going to come from, the quantum might be less but when looking at growth alone broadcasting has a lot of opportunities and growth that can be realised.
“Further examining what has happened to commercial printing, you find revenue going up, compared to last year at 82 percent, and then 31 percent against budget. Gross profit going up again by 125 percent, then 24 percent against budget; then net profit up 280 percent before exchange losses, and 126 percent above budget.
“So the real challenge is what to do with the exchange loss, which is sitting at around 415 percent year-to-date,” said the CEO.
He added that strategies are being discussed at board and management level on how best to manage the group’s incumbencies.
During the period under review, the group utilised capital expenditure to the tune of $1,057 million.
“We had to spend money to ensure that the business is continuously relevant and that we are renewing ourselves at all times. So for the past five months we have spent about $1,057 million in capital expenditure.
“We still need to spend money into the business to ensure that it is geared at all times. Further highlighting the upward momentum of the group, Zimpapers declared its first dividend in 20 years, and management expects the progress to be sustainable going forward.
“If you look at the performance of the share price, a growth of about 177 percent year-to-date and doing better than the ZSE average over the same period, which recorded a loss of 37,2 percent. So we are not in a bad place, we are hoping that with the profit that we are making, excitement around our shares will begin to increase,” said Mr Deketeke.