Caxton holds up in tough media environment


Caxton holds up in tough media environment

Published Date: 2019-09-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Caxton holds up in tough media environment

The printing and publishing group says it has shown some resilience by posting a relatively small decline in headline earnings.

Caxton & CTP says it did well to record just a small decline in headline earnings for the past year given the stagnant economy, a declining retail sector and continued changes in the highly competitive media landscape. And it says its strong balance sheet positions it well to buy businesses to help it grow and diversify.

The publishing and printing group said its local newspapers delivered a small increase in profitability in the year to end-June, reversing the declining trend of the past few years. These include 'knock-and-drop' publications such as the Rosebank Killarney Gazette, the Sandton Chronicle and the Krugersdrop News. Local advertising revenues held up relatively well as it introduced new and innovative sales initiates, which increased volumes into its publications. But in its magazine publishing and distribution business, revenues from advertising and copy sales continued to decline. It said the trend was expected to continue and further business-wide restructuring was taking place.

Book and magazine printing also faced a difficult year as the key educational textbook market was faced with subdued demand that led to a significant mix change and overall decline in margins. And apart from one operation, the packaging businesses performed well, growing profitability. Caxton said this reflected initiatives undertaken over the last few years, including upgrading equipment and infrastructure, rationalising the Gauteng operations and integrating a number of smaller acquisitions.

Group margins came under pressure as it wasn't able to recover a rise in raw material input prices from its customers. It recorded an accounting loss of R37.2 million after selling its shares in Private Property South Africa to associate Cognition Holdings. And it also booked a net impairment of R26.1 million on a printing press as there was no certain prospect that its capacity could be utilised in the short to medium term.

Revenue declined by 0.2% to R6.32 billion and profit fell 12.4% to R355 million. Headline earnings per share came in 6.8% lower at 101.6c and it's kept its dividend steady at 60c per share.

The group's cash and cash equivalents including listed preference shares increased by R159 million to R1.76 billion, remaining an important asset on its balance sheet to fund new growth opportunities.

Its shares closed 8.4% higher at R7.50 in thin trade.

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