Caxton stays consistent

Print and media group Caxton & CTP Publishers and Printers on Wednesday noted that its strategy of diversifying its operations and containing costs over the last few years is being rewarded. The group managed to grow revenues for the six months to December by 5.8% and profit for the period by 7.8% despite a tough trading environment.

Headline earnings per share were 8.8% higher, at 66.7 cents per share.

“Whilst Caxton is rooted in the media and publishing business, it has grown into a diversified and multi-faceted organisation,” the company noted in a statement. It said that its solid results are “testament to the group’s resilience as well as the benefits of the diversification of its business through acquisitions that have taken place over the last few years”.

This diversification has primarily been in its packaging and stationary division, which now accounts for 35% of company revenues and 40% of operating profit after depreciation. From profit of R94.7 million in the comparable period in 2015, the division showed profits of R111.7 million for the six months to December 2016, which is growth of 18.0%.

“The packaging divisions have performed well and increased profitability,” the group said. “This was assisted by a more stable exchange rate environment, although continued competitor activity mitigated this to some extent.”

In its traditional publishing, printing and distribution business, however, Caxton recorded a decline in operating profit before depreciation. Although revenues grew by 4.7%, profits fell by 10.9% from R192.8 million to R171.7 million.

“The daily and weekly newspapers continue to face difficult trading conditions with circulations continuing to decline, although the rate of decline has levelled off in comparison to prior periods,” Caxton said. “Advertising revenues in this market also remain under pressure and although audiences on digital news platforms continue to increase, the digital revenue generated does not replace the reduction in print advertising revenues.”

National advertising revenues in local newspapers did however show consistent year-on-year growth. This was offset somewhat by a significant decline in local advertising revenues due to weakening microeconomic environments in many of the towns in which the papers are published.

Caxton’s book printing division benefited from an unexpected increase in government spending on textbooks for the Eastern Cape. However, this remains an unpredictable earnings stream.

Looking ahead, the group remained optimistic that it is well positioned, even though economic growth will remain muted.

“The low-growth economic environment which currently besets South Africa is expected to continue and this will hamper meaningful growth in our traditional markets,” Caxton noted. “This having been said, the group remains in a strong position to take advantage of opportunities that usually arise in difficult times. We will continue to derive benefits from our diversification strategies, as new markets present themselves.”

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