Tough second half for Tiso Blackstar media business
Tiso Blackstar Group warned on Wednesday that it expects a tough second half for its media business, with political uncertainty in the run-up to the elections and rising newsprint costs expected to weigh on performance.
The publisher of Business Day, Sunday Times, Sowetan, TimesLIVE, Daily Dispatch and Financial Mail said the media unit faced rising input costs such as newsprint, “but prudent cost management and growth in new revenues such as digital and eventing will diversify revenue”.
CEO Andrew Bonamour said tough economic conditions, characterised by low growth, and rising input costs “have forced a continued review of costs across the [media] division”.
In the six months to end-December, Tiso increased revenue 2.9% to R2bn, while operating profit from continuing operations was up 21.6% to R144.1m. Tiso’s operating costs were down 5.5% to R442.5m.
The company reported a total comprehensive loss for the period of R66.5m, compared with a loss of R57.5m in the corresponding period in 2017.
Tiso’s retail marketing and packaging company Hirt & Carter increased revenue 11.5% to R1.1bn.
“The Hirt & Carter Group is focused on growing its customer base and utilising cross-selling opportunities to deliver volumes and drive topline growth,” Bonamour said.
Revenue from the media business declined 5.9% to R702.1m.
“Traditional reader and advertising revenue continue to be challenged by the economy,” the company said. “The full implementation of new editorial systems and workflows will ensure market-leading digital-first capacity and strong production savings.”
Tiso’s investments in the six months included the launch of Vrye Weekblad, a digital Afrikaans product in order to secure new digital subscription revenues, a new business intelligence system and a procurement system to reduce costs, it said.
The group sold unwanted steel business Consolidated Steel Industries (CSI) for R50m in November 2018, but said it had struggled to offload its other noncore assets. These include disposing of a 47.6% share in steel maker Robor. Bonamour said the company wanted to exit the business “as efficiently and quickly as possible while also realising value for shareholders”.
He said Robor’s merger with another steel company, Macsteel, had not materialised. The Competition Commission recommended to the Competition Tribunal in December that it approve Robor’s acquisition of Macsteel’s tube and pipe business.
“However, Macsteel and Trident, two of SA’s largest steel tube and pipe manufacturers, both announced the closure of their manufacturing plants, which should increase volumes through Robor’s plant and improve profitability,” he said.
Bonamour said the company had prioritised cost management, the disposal of its stake in steelmaker Robor and extracting value from its 20.01% stake in Kagiso Tiso Holdings.
The company’s shares were up 11.48% to R3.40 on Wednesday.