Zimbabwe Newspapers (Zimpapers), the country’s largest and listed diversified media group recorded a 14 percent growth in revenue in the three months to September 2022 compared to the previous quarter, despite subdued volume growth recorded in selected business divisions, chief executive Pikirayi Deketeke has said.
On a year-to-date basis, revenue grew by 67 percent to $12,7 billion in hyperinflation terms.
Reduced spending resulting from the measures instituted by the Government to stabilise the exchange rate and tame resurgent inflation saw the group recording subdued advertising volumes in its digital and publishing divisions.
This was however partially offset by an improved performance by the group’s commercial printing division, which benefited from uninterrupted availability of raw materials.
Broadcasting units also had modest contributions to the group’s turnover for the quarter.
The third quarter revenue growth, supported by volume growth across selected business units, was in line with the 13,8 percent average inflation for the quarter.
Net profit before tax and monetary adjustments increased by 51 percent to $1,4 billion on a year-to-date basis compared to the same period last year while a net profit margin of 11 percent was recorded compared to 12 percent in the same period last year, marginally weighed down by high cost of borrowing.
The group suffered exchange losses amounting to $115,7 million due to foreign currency shortage, which affected its profitability.
The newspaper division continued to be the biggest revenue contributor at 62 percent, but the share represented a 10 percentage points decline on account of improved contribution to the top-line by the commercial printing and radio division.
Advertising volume for the quarter under review declined by 28 percent compared with the previous quarter.
During the same period last year, the division constituted by publications that include The Herald, The Sunday Mail, H-Metro, The Manica Post, The Chronicle, and Business Weekly as well as various other digital platforms, recorded an 8 percent volume growth compared to the second quarter of the same year.
On a year-to-date basis, advertising volumes increased by 5 percent while circulation numbers fell 7 percent compared with the same period last year, Mr Deketeke said.
“The 28 percent volume decline was mainly caused by the Government’s economic interventions of increasing the cost of borrowing and freezing payments to its contractors to tame inflation and run-away exchange rates,” Mr Deketeke said.
“These worthwhile interventions had a negative effect on the overall demand for the division’s products as disposable income shrank. A number of advertisers were affected by these measures as they adopted a well-and-see approach,” he added.
The measures introduced by the Government in July this year, which included more than doubling of interest rates to 200 percent, freezing payments to public contractors, introducing of gold coins as an alternative store of value and making the US dollar a legal tender, saw the economy stabilising with premiums between official and black market exchange rates significantly falling while month on month and annual also eased.
Revenue from the Commercial Printing Division during the third quarter increased to 17 percent from 10 percent the prior quarter while radio broadcasting revenue slightly rose to 16 from 14 percent.
In volume terms, the Commercial Printing Division recorded a 54 percent increase in the third quarter compared to the second quarter on improved raw material supplies. The division had stock-out challenges in the second quarter due to foreign currency shortages.
The Radio Broadcasting Division recorded a volume growth of 3 percent compared to the same period last year on a year-to-date basis. But the momentum could not be sustained during the second quarter of 2022 due to a liquidity crunch.
As a result, volume declined by 9 percent in the third quarter compared to the previous.
The group’s TV channel, ZTN Prime, recorded a 41 percent volume growth in the third quarter compared to the previous quarter following its official launch on the DStv platform in May this year while on a year-to-date basis, volumes have increased by 35 percent.
The company’s liquidity remains affected by a slow playing significant debtor who owes the company $2,3 billion.
Going forward, demand will remain constrained as the liquidity crunch is likely going to continue. As such, the third quarter performance would be in line with the third quarter.