New Vision Printing and Publishing Company, the government-controlled media group, warned it will post a net loss for the year to June because of the weak economic recovery from the Covid-19 pandemic.
The company said Friday that revenue from advertising and newspaper sales had been hit by “the challenging business environment due to slow business recovery” from the coronavirus pandemic.
“The increase in prices of newsprint and other raw material inputs resulting from global supply chain disruptions has also adversely affected company performance,” said Don Wanyama, chief executive of Vision Group, in a statement to the Uganda Securities Exchange.
Shares of New Vision opened the trading day at Shs155 and were flat at midday.
The company’s net income for the six months to December fell by Shs339.2mn to Shs57.3mn ($15,402) owing to a decline in sales and higher operating expenses. Revenues decreased by 25.8 per cent, primarily because of lower publishing orders, but also due to a decrease in advertising across all business segments and a drop in circulation sales.
New Vision attributed the decline in performance to a lacklustre economy still recovering from the coronavirus and a surge in input prices, particularly fuel and transport costs. Despite this, the company was optimistic about the second half of the year, with management commenting that business was “steadily recovering and expected to pick up and grow.”
“Management is keen to increasing efficiencies and expects to conclude the financial year 2022/23 with a much better outcome,” it added.
The forthcoming loss will be New Vision’s second annual loss in the last three years. In the year ending June 2022, the media group recovered from its first-ever annual loss of Shs985.5mn in the previous year to post an after-tax profit of Shs988.7mn ($265,518). Still, profits remained below the average earnings achieved in the three years to 2020, during which the company’s net income consistently exceeded Shs2bn.
Chief executive Don Wanyama admitted as much in New Vision’s annual report, referring to it as a “modest profit.” He noted that the group’s traditional media revenue had not “fully recovered from the post Covid-19 lockdown effects”, and that investments in “alternative revenues” were still in their infancy.
These alternative revenues include education publishing, where the company now claims to be the main official publisher of textbooks, and digital media. Mr. Wanyama said that New Vision had started to see returns from its education publishing efforts, and digital media investments were expected to “increase their payback over the next financial years.”
The company has recently secured several loans to fund its publishing expansion. In 2021, it obtained a one-year Shs29.2bn loan from Stanbic Bank to finance the production of educational materials. It also borrowed an additional Shs7.1bn from the same bank at the start of the financial year to June to purchase printing equipment, adding to the outstanding debt of Shs11.9bn from the first loan. As of December, New Vision’s debt to Stanbic Bank stood at Shs13.1bn.
Publishing income reduced to 10 percent of total revenue in the half year to December, down from 33 percent a year earlier. However, it remained the largest contributor to earnings, just like in 2021.
New Vision only pays dividends when it has recorded a profit.
