Caxton & CTP reports strong financial results amid challenging conditions

Caxton & CTP Publishers & Printers' share price increased by 4.7% on Friday afternoon after it reported a 16% increase in annual dividend to 70 cents for the year to June 30 off the back of a resilient financial performance.

Normalised headline earnings a share for the publisher of regional newspapers, printer, packaging & stationery manufacturer, and digital asset delivery company increased by 12% to 178.9 cents. Cash and its equivalent balances ended the year 20.7% higher at R3 billion. The share price traded at R12.25, slightly below the R12.70 it traded at a year before on the same day.

“We delivered commendable results in difficult operating circumstances, characterised by little to no growth and subdued consumer spending in a highly competitive environment,” CEO Terence Moolman said in the results.

The earnings growth was in spite of only a 0.9% increase in revenue to R6.71bn. Profit from operating activities before depreciation and amortisation was 10.7% lower at R828.03m. Profit for the year declined 9.1% to R597.79m.

Moolman said the results were the result of the group’s resilience, focus on customers, and cost consciousness, as well as the benefits of timely and well-judged capital investments.

In the prior year, Caxton had benefitted from a non-recurring insurance receipt of R173.2m, so normalised headline earnings per share were included in the results to correctly reflect the operating performance.

Moolman said revenue showed signs of recovery in the second half of the year, but still reflect the tough economic environment. The group took advantage of pockets of well-priced raw materials as well as sourcing from better-priced suppliers, which assisted in mitigating the muted revenues.

Staff costs increased by R14.9m or 1.2% due to extracting efficiencies out of operations, whilst operating expenses increased by only R33.8m of 3%.

Excluding the prior year insurance receipt, operating profit before depreciation and amortisation increased by 9.8%, and after depreciation and amortisation, operating profit was up 17.1%.

Impairments of R50.8m (2024: R18.4m) related to the closure of a digital business (R5.3m), impairment of assets at the Durban gravure printing operation, which is faced with reduced throughput and cash generating outlook (R32.4m), and equipment no longer in use or replaced with newer technology (R13.1m).

Net finance income increased by R10.4m to R247.4m, as increased interest income (R35.5m) more than offset the reduced dividend flow (R13.8m) from Mpact and Thebe Convergent Technology Holdings (Kaya FM). Interest rates declined, but this was offset by the higher average cash balances held.

Over the last two financial years, the group's cash balances have increased by R1.1bn, reflecting strong cash generating ability.

In addition, cash increased by R668.4m over the interim reporting period, which is a normal trend following the peak trading season.

On prospects, Moolman said there was no expectation that the economic outlook would improve, and with this in mind, all aspects of the operations were being managed closely, and actions would be taken where needed.

“Our balance sheet grows from strength to strength and puts us in the enviable position of being able to continue to allocate capital wisely and take advantage of any opportunities that might present themselves,” he said.