Zimbabwe Newspapers Limited (Zimpapers) half year earnings plunged 6.8 percent in inflation-adjusted terms to ZWL$ 256.6 million from ZWL$ 275.4 million comparable period last year as its flagship newspaper division continues to succumb under pressure from digitalization.
The media business space has become increasingly competitive owing to the proliferation of digital platforms and for print media this has had a damning effect on their balance sheets.
Mounting operating costs, mainly in the importation of newsprint worsened matters for the state-controlled concern resulting in the newspaper division being the only segment recording a decline in revenue and an operating loss during the period under review.
“The Company suffered volume and pricing deficits owing to the operating environment challenges. The Company’s gross profit margin declined to 58.9% from 66.9% (inflation adjusted)… owing to high cost of sales driven by hyperinflation at a time when volumes were constrained by the pandemic during the period under review,” said Zimpapers Board Chairman, Thomas Sithole.
Operating costs stood at 59.7 percent of the Company’s revenue compared to 51.8 percent recorded for same period last year.
Following a monetary loss adjustment, the Company recorded an operating loss before tax of ZWL$32,7 million compared to a profit of ZWL$47,5 million for the comparative period.
Of its three business segments, the Commercial Printing Division recorded a 15.6 percent revenue growth to ZWL$68.1 million while the Radio Broadcasting Division’s revenue improved by 12.3 percent to ZWL$40.3 million.
However, it was the Newspaper Division which recorded a revenue decline, receding 17.9 percent in earnings to ZWL$148.2 million from ZWL$180,6 million recorded for the same period last year, a reminder how badly traditional print media is under threat.
The Division also incurred a significant exchange loss of ZWL$17 million resulting in an operating loss of ZWL$10.7 million.
In response, the Group is strengthening its digitalization drive by migrating towards virtual platforms to remain relevant to market trends including pursuing a license to venture into television broadcasting going forward.
“Zimpapers responded to these new challenges by migrating some of its publications namely Kwayedza, Umthunywa, Business Weekly and B Metro to the digital platform to conserve imported newsprint in the face of uncertainty in the movement of this critical raw material across the borders,” Sithole said.
The Group will withhold interim dividend for the period as it intends to strengthen its financial position and ensure a healthy liquidity position.