Zimpapers posts US$620 000 profit

US$624 000 profit in the full year to December 31 2010.
This was largely due to a US$5 million profit before tax achieved by the publishing concern’s newspaper division. The group is now geared to further consolidate its market share. However, the group said it was not declaring a dividend because it needs the cash to recapitalise operations.
Zimpapers has managed to stave off competition from new entrants into the newspaper industry to remain the publisher of choice for most readers and advertisers.
Group chairman Dr Paul Chimedza said the firm would continue to invest in information technology systems despite challenges around low cost funding.
“Endless efforts are being made to ensure that the company continues to produce the best newspapers in the market and that newsprint supply is adequate,” he said.
The solid performance of the newspaper division came on the back of a sterling performance in revenue, which rose 88 percent on prior year to US$33,4 million.
The group’s newspaper division weighed in with the bulk of the revenue contributing US$30 million compared to US$3,5 million from commercial printing.
Dr Chimedza said the group’s overall improved revenue performance was attributable to improved capacity utilisation due to better short-term borrowings.
The Zimpapers chairman said the overall good performance “is expected to continue in the foreseeable future”.
Cost of sales amounted to US$11,1 million resulting in a gross profit of US$22,3 million, which translated to a 67 percent margin.
Group after-tax profit, at US$625 000, was largely diluted by the loss from commercial printing. But this was a 131 percent rise in profitability from a loss position on prior year.
Dr Chimedza said the poor performance in the commercial printing division was attributable to high overheads and low revenue. This has promoted the board to merge the operations in Harare and scale down in Bulawayo for a leaner structure.
This reorganisation is expected to yield positive results to enhance shareholder value and main operations of the commercial printing now at National Printing.
Efforts were underway to ensure that the commercial printing division is recapitalised and it is expected to return to profitability in the first half of this year.
The group’s commercial printing involves printing books, labels, security documents, diaries, calendars and origination.
The newspaper business revolves around newspaper and magazine production while the corporate segment owns properties and also takes care of the group’s head office administration activities.
Dr Chimedza said Zimpapers was confident of profitability after breaking into the profitability territory.
He said the economic outlook was bright in the wake of new medium-term funding that was trickling into the market.
This was expected to improve liquidity and allow the group to implement the much-needed refurbishment and recapitalisation of operations.