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Business Writer

THE country’s largest integrated media group, Zimpapers (1980) Limited, says its first-quarter operations were negatively affected by increasing local currency volatilities, as the business largely operates in local currency resulting in a net operating loss before tax of ZWL$132 million for the period under review.

In a trade update for the quarter ended March 31, the group chief executive, Mr Pikirai Deketeke, said the period under review was characterised by local currency volatility, relatively high Zimbabwe dollar borrowing rates and depressed domestic demand.

He highlighted that over 77 percent of local transactions were reported to have been done in hard currency, and the quarter witnessed further widening of the gap between the official exchange rate and the parallel market rate that affected the general pricing of goods and services in the economy.

Mr Deketeke said the group volume performance was affected by the general slowdown in advertising spending and low demand for the period under review.

“Several of our clients had limited advertising budgets owing to the tight operating environment. This was worsened by raw material availability and logistical challenges on imports, constraints associated with foreign currency availability, and the general slowdown in advertising activities over the period under review. Resultantly, total volumes for the group declined by 23 percent,” he said.

During the period under review, the group’s revenue grew by 382 percent to ZWL$$5,5 billion when compared to the same period last year.

However, while volumes were depressed, the business continued to incur high-cost increases from local currency volatilities as the business largely operates in local currency, he said.

“The impact of the high cost of borrowing in local currency had a further negative impact on the operational efficiencies of the business. In addition, the deterioration of the local currency against major currencies had an adverse impact on the cost of imported raw materials,” said Mr Deketeke.

“Resultantly, the group recorded a net operating loss before tax of ZWL$132 million for the period under review compared to a nine percent net profit margin for the same period last year.”

The chief executive officer said the group continued to focus on debt collection from its credit clients who were struggling to pay owing to the liquidity challenges.

“Management continues to put concerted efforts to improve the collections and change trading terms where possible to effectively improve its cash cycle,” he said.

Mr Deketeke said in line with the trend over the years, the operating environment is expected to improve in the second half of the year, which is usually the peak season for the company’s products.

He noted that the economic interventions by the Government to stabilise the operating environment are also expected to bear fruit as the year progresses.

“It is against this background that the company’s performance for the second half of the year is expected to be better than the period under review,” said Mr Deketeke.

The Zimpapers Group comprises 10 newspapers, four radio stations and a television station, ZTN. Its publications include flagship dailies — Chronicle and The Herald, weeklies — The Sunday Mail, Sunday News and Business Weekly, tabloids — B-Metro and H-Metro, Manica Post and indigenous languages papers — uMthunywa and Kwayedza.

Recently, the Zimpapers group’s Kwayedza newspaper launched two titles Umthunywa-Funda and Kwayedza-Dzidza, which are solely published educational content for school-going children.

The group also publishes the Suburban and runs Star FM, Diamond FM, Nyaminyami FM and Capitalk.