Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Printing and publishing group Caxton is bullish about SA’s economic prospects, saying it is well positioned to take advantage of an expected increase in consumer spending in this financial year.
“The group’s operations are well placed to capitalise on any uptick in consumer spending and the hope that load-shedding risks continue to decline, inflationary pressures reduce and interest rates drop, which translate into improved trading conditions,” the group said as it reported full-year earnings to June 2024.
Should this not materialise, “the group is fortunate that its balance sheet remains strong with significant cash balances to deploy should opportunities arise”.
The publishing house reported flat revenues and decreasing margins in the year ended June, forcing it to cut costs.
“In the absence of any growth in revenue and increasing margin decline, it was important to focus on cost containment,” it said.
Staff costs declined 3.8%, or R49.8m, for the period, while operating costs were 1.1%, or R12m, lower.
Caxton reported a decline in revenue, driven by losses from asset sales, reductions in publishing and a slowdown in its packaging operation.
Revenues declined 4.7% to R6.647bn, which included R176.1m loss of revenue relating to the sale of a business and closure of a subsidiary.
The group said its publishing and printing operations faced reduced printing throughputs and overall decline in media advertising revenues, as national retailers reduced their spending to take account of the constrained consumer environment.
The same trend had been noted at the half-year.
“In a difficult trading environment, the packaging businesses managed to grow revenues, which confirmed the resilience of the markets that we serve.”
Profit from operating activities before depreciation and amortisation declined by R53.9m. After depreciation of R269.3m, profit from operating activities decreased by 11.4% to R657.9m.
The group argued that the decline in operating profits was “to a large extent” offset by insurance proceeds of R173.2m and net finance income of R237m.
Headline earnings per share, which exclude the impact of one-off financial events, increased 4% to 196.1c.
All this comes as a time when Caxton has made multiple attempts to take over some of Media24 assets.
The Naspers-owned group is selling its media logistics business, On the Dot, and its community newspaper portfolio to Novus Holdings subject to regulatory approvals. Caxton has made a competing offer for the assets.
In mid-June Media24 said it was seeking to close the print editions of five newspapers, transitioning three of them to digital-only brands, placing 400 jobs at risk. Print editions on the block are Beeld, Rapport, City Press, Daily Sun and Soccer Laduma, as well as the digital editions of Volksblad and Die Burger Oos-Kaap, and digital hub SNL24.
As digital brands, the affected print publications will reside on the group’s Netwerk24 and News24 platforms.
The group has rejected Caxton’s advances, saying it will not renege on its agreement with Novus. It is willing to entertain an offer from Caxton, or another party, only for the Beeld publication “in the interest of minimising potential job losses ... and keeping Beeld alive as a brand that carries sentimental value”.
Caxton shares shot up 9.48% in trade on Friday, closing at R12.70. The stock is almost 27% stronger over the past 12 months.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Caxton bullish about SA’s economic prospects
Printing and publishing group Caxton is bullish about SA’s economic prospects, saying it is well positioned to take advantage of an expected increase in consumer spending in this financial year.
“The group’s operations are well placed to capitalise on any uptick in consumer spending and the hope that load-shedding risks continue to decline, inflationary pressures reduce and interest rates drop, which translate into improved trading conditions,” the group said as it reported full-year earnings to June 2024.
Should this not materialise, “the group is fortunate that its balance sheet remains strong with significant cash balances to deploy should opportunities arise”.
The publishing house reported flat revenues and decreasing margins in the year ended June, forcing it to cut costs.
“In the absence of any growth in revenue and increasing margin decline, it was important to focus on cost containment,” it said.
Staff costs declined 3.8%, or R49.8m, for the period, while operating costs were 1.1%, or R12m, lower.
Caxton reported a decline in revenue, driven by losses from asset sales, reductions in publishing and a slowdown in its packaging operation.
Revenues declined 4.7% to R6.647bn, which included R176.1m loss of revenue relating to the sale of a business and closure of a subsidiary.
The group said its publishing and printing operations faced reduced printing throughputs and overall decline in media advertising revenues, as national retailers reduced their spending to take account of the constrained consumer environment.
The same trend had been noted at the half-year.
“In a difficult trading environment, the packaging businesses managed to grow revenues, which confirmed the resilience of the markets that we serve.”
Profit from operating activities before depreciation and amortisation declined by R53.9m. After depreciation of R269.3m, profit from operating activities decreased by 11.4% to R657.9m.
The group argued that the decline in operating profits was “to a large extent” offset by insurance proceeds of R173.2m and net finance income of R237m.
Headline earnings per share, which exclude the impact of one-off financial events, increased 4% to 196.1c.
All this comes as a time when Caxton has made multiple attempts to take over some of Media24 assets.
The Naspers-owned group is selling its media logistics business, On the Dot, and its community newspaper portfolio to Novus Holdings subject to regulatory approvals. Caxton has made a competing offer for the assets.
In mid-June Media24 said it was seeking to close the print editions of five newspapers, transitioning three of them to digital-only brands, placing 400 jobs at risk. Print editions on the block are Beeld, Rapport, City Press, Daily Sun and Soccer Laduma, as well as the digital editions of Volksblad and Die Burger Oos-Kaap, and digital hub SNL24.
As digital brands, the affected print publications will reside on the group’s Netwerk24 and News24 platforms.
The group has rejected Caxton’s advances, saying it will not renege on its agreement with Novus. It is willing to entertain an offer from Caxton, or another party, only for the Beeld publication “in the interest of minimising potential job losses ... and keeping Beeld alive as a brand that carries sentimental value”.
Caxton shares shot up 9.48% in trade on Friday, closing at R12.70. The stock is almost 27% stronger over the past 12 months.
gavazam@businesslive.co.za
Media24 boss Ishmet Davidson on the way out
Capital Newspapers rails at Media24’s anti-competition claims
Drum and True Love magazines ‘on the chopping block’
Caxton earnings down on asset sales and publishing slowdown
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.