Media group Caxton reports marginal H1 profit

Media group Caxton & CTP Printers (CAT/CATP) announced on Monday (20 February 2012) a fractional rise in profit from operating activities to R399.1 million for the six months ended December 2011, from R395.9 million before – in what the group described as “a difficult environment” amid an on-going  migration to digital alternatives.

Turnover grew ahead of inflation by 8.9% to R2.586 billion, it said.

Headline earnings per share declined to 56.4 cents for the period, compared to 63.7 cents previously.

Caxton noted that in the comparative period, headline earnings were adjusted by an impairment of R23.5 million relating to the Pearson Southern Africa Group, which was, during that period, an associate and which is now an investment, and therefore for comparison purposes should be adjusted.

Based on such an adjustment headline earnings for the six months ended December 31, 2010 would have amounted to 58.6 cents per share, it said.

“The global media landscape remains challenging. Print media has been negatively impacted by the migration to digital alternatives and its share of advertising spend has declined.

“Whilst difficult economic conditions were forecasted to be prevalent throughout the year, consumer spending was at a relatively high level and both retail and wholesale sales grew above inflation.

“This could not have been possible without consumers taking on additional debt and a worrying feature of this is the burgeoning of the granting of unsecured loans by the banking sector, and the recent statistics pointing to an increase in the number of individuals who are unable to pay their debts,” the group said.

Caxton said that the property and classified sectors underperformed with an increasing number of readers making more use of mobile and digital technology to fulfil their needs.

“The launch of the “Look Local” web-based sites is on schedule and the roll-out is nearing completion with good interaction from the public. These sites are being developed to complement the printed products and to allow on-line users to interact with local communities giving our many readers, who number over five million, the ability to focus exclusively on their catchment area,” Caxton said.

For its magazine publishing and distribution division, Caxton said that further progress has been made in both revenue and profitability growth.

“As time goes by it is becoming increasingly evident that printed magazines are not going to be anywhere as badly affected by digital products as printed newspapers have and, whilst there will be an ongoing migration towards digital, the life cycle of printed magazines is unlikely to be curtailed,” the media group said.

However, it added that the ongoing need for digital innovation and products is gathering at a pace and steps are being taken to support existing publications with a variety of applications.

“The mushrooming of digital tablet devices and mobile phones has been quite remarkable and this event has already affected book publishing from a printing perspective.”

Looking ahead, Caxton said that economic conditions world-wide were fragile and media globally is experiencing changing conditions and new challenges.

“Print media, in particular, is having to deal with the migration to digital products and technologies, and lower advertising revenues. Judging by the performance of our peers, the company has performed creditably, albeit at a slightly lower level of profitability. This situation is likely to continue for the remainder of the financial year,” it concluded.

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Media group Caxton reports marginal H1 profit