Printing keeps New Vision in black ink with Shs4.9bn profit

Growth in commercial printing helped Vision Group (NVL) to Shs4.9 billion in profit in FY2015/16, down from Shs5.2 billion the previous year, the company announced Thursday in its full-year financial release.

Commercial printing grew by 39.4% with radio and television growing by 18.5% and 15.8% respectively, contributing to a 6.7% overall growth in turnover to Shs92.6bn.

However, direct costs increased by 8.7% to Shs68.6 billion while administrative costs rose by a billion shillings to Shs13.3bn to put pressure on the bottom line. The company blamed the higher costs on a weaker shilling, inflationary pressures and increased operational expenses.

“Administrative expenses increased by 7.6% despite high inflationary pressures in the economy and the increased operational expenses incurred in providing support to the mainstream revenue units,” the company said in a statement.

Profit before tax was flat at Shs7.4bn and the company had Shs5bn in cash and cash equivalents, down from Shs10.7bn at the end of last financial year. Cash from operating activities moved significantly from Shs14.1bn in FY2014/15 to Shs2.5bn in the reporting period.

Print advertising grew by 3.7% but the company statement was silent on circulation, traditionally a strong contributor to turnover, as the print industry continues to face competition from digital platforms.

The company recently revamped its pullouts in New Vision to stem a slide in print circulation while Bukedde, which had overtaken the English titles to become the biggest-selling paper in the country, has shed numbers after a cover-price increase to fall back to second position.

Although earnings per share fell from Shs69 to Shs64 year-on-year, the company board has proposed a dividend of Shs50 per share. The NVL counter was down 1.45% to Shs542 at closing on Thursday afternoon on the USE, giving it a market capitalisation of Shs41.4bn.

The books will be closed on January 2, 2017 for the dividend to be paid by January 18, 2017 if approved by shareholders at the annual general meeting on November 17.

The growth in commercial printing appears to vindicate recent investments by the company in high-end printing equipment at its plant in Kampala while investors nervous about the pace and extent of its expansion plans will be relieved to see turnover growth in the broadcast division.

However, it is still not clear how many of the company’s six radio stations and three free-to-air television stations are carrying their own costs. It is also still not clear how well the company is converting its online audiences to revenue – a challenge facing many traditional media houses as they adjust their business models to changes in audience consumption and behaviour.

Apart from New Vision and Bukedde, which are the highest circulating in the English and Luganda language markets, the company also publishes local-language newspapers Etop, Rupiny and Orumuri. Its most competitive broadcast platforms are Bukedde TV and Radio as well as Radio and TV West. While its English-language Urban TV and XFM radio have grown, they have struggled to attain leadership in a fragmented and competitive landscape.

Government of Uganda owns 53% of the company through the Finance Ministry with the rest traded on the Uganda Securities Exchange since 2004.