Caxton earnings climb 10.5%

Revenue grew 15.5% from R3.47bn in the year to end June 2006 to R4bn while net profit rose by 17.8% from R525.8m to R619.4m in the year.

Caxton prints the Citizen as well as several womens' magazines including Woman & Home and People Magazine.

During the year under review the company benefited from the consumer boom.

It said continued growth in retail spending benefited advertising where volumes were up. Raw materials prices remained relatively stable during the year, which translated into a positive growth in volumes.

The company's ability to generate cash from operations was a strong feature of the company's overall performance.

Cash and cash equivalents at end June 2007 amounted to R984.3m with R850.8m generated by its operations for the year.

Capital of R305.5m was spent during the year to expand operations.

Packaging business remains poor

But while Caxton's publishing divisions produced good results, its commercial printing and the packaging divisions had to contend with continued margin pressure. The packaging business, in particular, reported a poor performance.

Looking ahead, the company expected its results to be impacted by a slowing in consumer spending as consumer debt levels were reined in by interest rate increases and the new National Credit Act.

"There can be no doubt whatsoever that the consumer boom which has benefited the country as a whole for some time will be more muted going forward," the company said.

It added that global market turbulence could worsen inflation over time and if investment support for local bonds and equities is reduced, the local currency could find itself under further pressure.

"While this will be good for exporters it will, however, have a dramatic influence on the company's input costs and the prices of products and services would have to be increased to offset this event," Caxton said.

The company is dependent on the supply of paper, ink and other consumables from overseas sources and the stability of the currency plays an important role in setting prices.

However, the company believed that the stability of the company and the investments it has made over the past few years should result in earnings enhancement going forward.

It said the year ahead would see it invest in most of its factories, in new plant and technology.

Provided that new developments do not extensively alter the economic environment, further earnings growth in line with those reported in FY2007 can be anticipated, it said.

- I-Net Bridge