New Vision Printing and Publishing Company, the government-controlled media group, sounded the alarm on profits on Thursday, blaming a drop in newspaper sales and advertising revenue, as well as higher operational costs.
The company said it will post a loss for the year ending in June, which will be the third year in a row that it has lost money.
“The main contributor to this performance is the challenging business environment due to media newspaper sales and advertising revenue spend across the different platforms that is still recovering coupled with the increase in prices of raw material inputs and other operational costs,” the group said in a statement signed by its chief executive, Don Wanyama.
The warning strikes a different tone from the company’s outlook in its financial statements for the six months to December, during which it also incurred a loss. At the time, it said it would implement “adequate revenue initiatives and cost management interventions,” and expected to “conclude the financial year 2024/25 with improved performance.”
New Vision posted a loss of Shs856.9mn for the six months to December, down from Shs7.6bn in the same period a year ago. Revenue increased for the first time in three years, rising 14.2 per cent to Shs42.6bn. Meanwhile, the cost of sales fell 4.4 per cent to Shs33.9bn. The company does not include other costs and expenses in its half-year financial statement.
The group attributed the increase in revenue to a rise in commercial printing sales and advertising revenue, as well as a new revenue stream from merchandise trading. Revenue from circulation and publishing declined, on the other hand.
According to its 2023/24 annual report, the company aimed to rebound to profitability and achieve consistent earnings in the financial year ending in June. This was to be achieved through investments in “non-traditional media revenue arms of packaging, outdoor advertising, courier and media agency.”
New Vision launched a nationwide courier service in the first half of the year, which it said was profitable. The new trading merchandise segment also turned a profit. However, the profits from these new segments were insufficient to offset the decline in revenue from traditional sources such as circulation and advertising.
In the year to June 2024, the company reported an 8.3 per cent drop in revenue driven by declines in publishing sales, advertising, and newspaper circulation. Only commercial printing and scrap sales saw a rise in income.
Advertising generated 58.9 per cent of total revenue, while commercial printing sales accounted for 24.5 per cent and advertising for 13.2 per cent.
New Vision reported its largest ever full-year loss in the 12 months to June 2024. Net losses for the period increased to Shs11.2bn from Shs5.5bn in the previous year. This was primarily due to a decline in revenues, as the company managed to reduce most of its expenses.
