Zimpapers anticipates digital future

Tommy Sithole

HARARE – Zimpapers Limited, the country’s largest diversified media group, is steadily increasing its digital footprint as it seeks to remain a competitive entity, chairman Tommy Sithole has said.

In view of the quick and disruptive nature of technology on traditional media, the Zimpapers chairman said the group has adopted a web-first approach, with a special focus on breaking news and getting stories on the web as fast as possible, on a 24-hour-a-day, 7-days-a-week news cycle.

This has necessitated a consolidation of the group’s digital news platforms.

“Zimpapers has been consolidating its digital footprint to take advantage of the changing news consumption habits of audiences,” said Sithole in a statement accompanying the group’s half-year results.

“Digital products under focus in this regard include digital newspapers (www.newsbub.co.zw), electronic newsletters, digital magazines, (farming magazine, BH24), mobile news (breaking news, farming news), news apps (Kwayedza App) and mobile sites since users are increasingly shunning desktops for more mobile sources.

“Research is underway to experiment with web-based pay walls over and above currently running SMS-based paid content platforms.”

Although online revenues are still a fraction of the income from the group’s traditional print or broadcast forms, the new platforms have increased the value of the package to meet customer demands and expectations.

The importance of developing new revenue streams was highlighted in the group’s half-year interims to June 30, 2019 as revenue growth during the period was weighed down by inflationary pressures.

The group’s revenue for the period rose 63 percent to $32,9 million, from $20,2 million recorded in the prior comparable period.

But the 63 percent revenue growth was below the official inflation of 175,66 percent “as the company could not increase either sales volumes nor selling prices to match inflation owing to the liquidity challenges that were obtaining in the economy,” reported management.

“Therefore, below inflation revenue growth was recorded across all the divisions, with a significant percentage growth being recorded from the Commercial Printing division.”

Zimpapers’ gross profit margin improved to 67 percent compared to 64 percent for 2018. As a result, a 70 percent increase in gross profit to $22 million was recorded during the period under review.

But again these numbers were inflation-diluted.

With the gross profit margin below inflation, operating costs were curtailed at $17 million.

Operating costs jumped 57 percent from $10,9 million prior comparable period.

However, management focused on cost management strategies to improve operating profit margins.

Resultantly, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 97 percent to $6,8 million from $3,5 million previously.

And the group recorded a 165 percent increase in net profit before tax to $5,7 million from the $2,1 million recorded in 2018.

In respect of divisional performances, the linchpin Newspaper division recorded a 52 percent growth in revenue to $21,6 million from $14,1 million last year.

Operating profit for the division improved by 121 percent to $4,2 million compared to $1,9 million for 2018.

The Commercial Printing division recorded a 100 percent revenue growth to $7 million as a result of an increase in market share.

Operating profit increased by 293 percent to $2 million compared to $0,5 million following optimisation of the division’s operating efficiencies and improved sourcing strategy.

The Radio Broadcasting division’s revenue improved by 58 percent to $3,5 million on the backdrop of market consolidation whilst operating profit increased by 212 percent from $0,2 million to $0,7 million on account of both revenue growth and better cost management.

Going forward, the group is pinning hope on a number of internal strategies to drive profitability going forward.

“Performance of the company for the second half of the year is expected to be better than the first half as the company is working on revamping some of its products and making headway on new strategies.

“The board and management is focused at initiatives that improve the company’s product portfolio in the wake of disruptive innovations. Focus will remain on the digitalisation strategy and new projects as the company diversifies to broaden its revenue base,” said Sithole. – Herald