Zimpapers declares interim dividend…as volumes tick up across segments in Q3

Zimpapers chief executive Pikirayi Deketeke

Business Reporter
Diversified media group, Zimbabwe Newspapers (1980) Limited, has announced an interim dividend of 2 cents per share, reflecting a positive dividend-price ratio of 3 percent, despite the Covid-19 impacted operating environment.

After a prolonged wait, the continued dividend payment, after last year’s first dividend, points to the group’s improved financial performance in recent years.

What also makes the latest dividend pay-out exceptional is that it has been paid before year-end, a sign of confidence that the company is seeing better days ahead.

The dividend will be payable on or about December 18, 2020 to shareholders registered in the books of the company at the close of business on December 4, 2020.

The latest dividend payout is reflective of the group’s improved financial performance in the nine-month period to September 30, 2020 as volumes ticked up despite a difficult operating environment that centered around the Covid -19 pandemic.

The pandemic added to woes already affecting local businesses, not least inflationary pressures.

But the integrated media group managed to side-step these challenges to boost volumes.

Revenue for the third quarter to September 30, 2020 rose 123 percent to $366, 7 million from $164, 7 million in the second quarter as business improved during the period on the back of the easing of lockdown restrictions.

“Despite the adverse effects of the Covid-19 pandemic and the general economic volatility, the group’s financial performance recovered in the third quarter of the year compared to the second quarter. The recovery was premised on volume and price recovery during the third quarter,” said Zimpapers chief executive officer Mr Pikirayi Deketeke in a trading update.

“Volumes for the Commercial Printing Division grew by 26 percent and 10 percent when compared to the second quarter and same period last year respectively as the division capitalised on being designated a critical service provider during the lockdown period.

“Positive volume growth of 7 percent and 11 percent was also recorded by the Radio Broadcasting Division and the newly established online television station, ZTN, respectively.

“Although the group’s Newspaper Division suffered the most from the effects of the Covid-19 pandemic, there was a 15 percent advertising volume recovery whilst circulation volume remained depressed, being 33 percent adverse to the same period last year.”

The better performance across divisions drove the group to improved profitability, with net profit before interest and tax and monetary adjustment rising to $96, 5 million compared to $7, 6 million in the second quarter.

Management continues to see fruition of the group’s ‘digital first’ strategy.

“In line with the company’s digitalisation strategy, digital revenue continued to grow and now contributing 4, 1 percent of the Group’s total revenue,” said Mr. Deketeke.

“The company is taking various initiatives to strengthen its digital strategy.”

For the nine months period to September 2020, Zimpapers recorded Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) of $192, 5 million (or $117, 7 million on a historical basis) compared to $193, 1 (historical $13, 6 million) for the same period last year.

But due to a monetary loss of $96 million recorded during the period under review, the group had an operating loss before tax of $14, 9 million (historical, profit of $82 million) compared to a profit of $186, 6 million (historical $13, 8 million) for the same period last year.

Going forward, management said it is looking to leverage both internal strategies and an improving operating climate to boost profitability.

“The company’s performance for the fourth quarter of the year is expected to be in line with the recovery recorded during the third quarter.

“To that end, the company is expected to remain profitable at year-end. Volume recovery will remain a topical issue for the company as the economy is expected to continue improving driven by the improved foreign exchange availability and the economic stability that has already been registered in the third quarter,” said the CEO.

“Furthermore, the focus will also be on foreign currency generation, digitalisation strategy and new projects as the company diversifies to broaden its revenue base, whilst also focusing on maintaining the business viability of existing product offering.”