The performance volatility of the New Vision Printing and Publishing Company Ltd continues as the management notifies current and prospective shareholders of an impending loss for the year 2022/2023.
The notice issued by managing director Don Wanyama is based on the "preliminary assessment" of the company's performance, by the board of directors, which is expected to return a loss for the year ended June 30. Wanyama partly blames the woes at the parastatal on the recent price hikes of inputs like newsprint and other raw material inputs resulting from global supply chain disruptions, a situation, he says, has also adversely affected company performance.
The company's revenues are dominated by printing which accounts for almost half, followed by broadcasting (radio and television) outlets, commercial printing and others.
"The main contributor to this performance is the challenging business environment due to slow business recovery from the COVID-19 impact on newspaper sales and advertising revenue spend across the different platforms," Wanyama says.
The ups and downs of the country's largest media house have been on and off for more than five years, and are thought to have led to the early forced retirement of former managing director Robert Kabushenga in 2021 after 15 years.
The company saw a rapid expansion from a print to a multiplatform media house, establishing and acquiring radio and TV stations as well as privately-owned newspapers in the countryside, a move that analysts warned was not well thought-out and capable of having a long-term effect on the performance.
In the year ended December 2019, the company announced a net profit of Shs 1.595 billion. But this fell to a loss of Shs 1.375 billion the following year, mainly due to the strict anti-COVID-19 lockdown. A loss of Shs 985.5 million was recorded in the financial year 2020/2021 but the company recovered to post a profit of Shs 988.7 million after tax in 2021/2022.
There was a record jump in sales revenues to Shs 111.4 billion from Shs 81.9 billion recorded in the previous year. However, higher growth in profit was curtailed by the huge budget of Shs 24.9 billion to outsource the printing and publishing of educational materials.
Half-year results for the period ended December 2022 show a profit of just Shs 57.35 million, down from Shs 396.5 million for the same period in 2021. The slower-than-expected recovery of the economy from the impact of the COVID-19 pandemic continues to affect the different revenue streams of media houses.
They say that this is made worse by the economic and spending restructuring caused by the two-year pandemic period, which has in turn disrupted sales and advertising projections.
For the New Vision, advertising revenue declined by 3.15 per cent, while circulation sales were down by 12.5 per cent in the first half of the financial year. The highest decline was recorded in publishing revenues at 77.7 per cent. However, there was an improvement in the revenue from commercial printing of 29.9 per cent.
The electronic media didn't perform any better, with the radio segment advertising revenue declining by 23.2 per cent, while revenues from TV fell by 4.53 per cent, and print advertising returned a decline of 2.86 per cent. This financial year, the company received a certificate of mass production for printing, ministry of Education and Sports educational materials for senior three and senior four during the period.
"The total revenues recognised from these contracts in the interim period was Shs 4.38 billion and payments of Shs 758 million were made, leaving the ministry with a total outstanding debt of Shs 8.28 billion," the company says.
These were reflected under "receivables" for the half year ended 31 December 2022. In that period, publishing contributed 10 per cent to total revenue but accounted for 9.18 per cent of the total costs.
It also accounted for the highest contribution to profitability for the period ended 31 December. There are notable increases in amounts not yet received mainly due to the slow recovery of publishing debts and other receivables. In the run-up to the Kenya general elections in August last year, New Vision increased stocks of commercial paper, newsprint, printing inks and materials "in anticipation of unexpected risks and uncertainties" during the poll period.
Documents show that the increased inventory levels combined with the slow recovery of receivable money affected cash and/or working capital availability, leading to a buildup of trade payables. These developments have affected the profitability of the company as it is due to report.