Caxton suffers 'disastrous' hedge loss

Johannesburg - The R157.2m currency hedge loss reported by publishing and media house Caxton and CTP Publishers and Printers [JSE:CAT] is a "disaster", according to one analyst. 
 
The company incurred the loss in the 12 months to end-June after hedging on the cost of imported capital equipment and inventory at its printing business. 
 
"It's all very well to cover themselves against a future cost, but it's not a one-way street and this backfired badly," said Vestact analyst Paul Theron.
 
The significant currency losses overshadowed what was otherwise a fairly resilient performance from the media house in a tough trading environment.
 
Caxton reported a small increase in turnover from R4.028bn to R4.087bn during the year under review and net profit from operating activities increased by 24% to R458.4m.  
 
The dividend was kept unchanged at 40c/share and a preference dividend of 357cents/share was also announced.
 
Caxton operates chiefly in the print space of the media industry and suffered from lower advertising revenues. Key Caxton magazines include People, Your Family as well as Food & Home Entertaining. Caxton also owns national daily newspaper, The Citizen.  
 
"During the run-up to the Football World Cup additional investments were made by marketers in television advertising to the detriment of the print industry as a whole," said the company in a statement on Tuesday.
 
Meanwhile, Caxton's strategy for improving its online publishing platform will be key to the group's future, said analysts.
 
During the period under review, the company spent R20m in buying just over 30% in Alt-X listed online publishing group Moneyweb Holdings [JSE:MNY].
 
The pair has formed a partnership that will see Moneyweb supporting Caxton to establish complementary digital products for their various print publications.
 
Theron said the purchase of the Moneyweb shares has raised some eyebrows in the market and it remains to be seen exactly how much value the small media company will add to the Caxton stable.
 
He said that it would be wisest if Caxton takes its community newspapers online in an aggressive way. Caxton owns over 120 community titles around the country and these have a combined circulation of two million copies a week.
 
These community titles are aimed at people who want to know what is happening exclusively in their suburb and Theron believes there's a gap in the South African online space for a similar digital product.
 
 - Fin24.com