Friday, May 15, 2020

Zimpapers Strategy Pays Off
16 MAY, 2020
Business Reporter

Integrated media group Zimbabwe Newspapers (1980) Limited will continue to leverage on its digital strategy to minimise the economic effects of the Covid-19 pandemic.

Group chairman Mr Tommy Sithole said the company’s “digital first” strategy has been paying off within the context of Covid-19 and was key to long-term success as the company put in place clear recovery strategies to ensure viability.

“The company will ride on its diversification strategy as some investments were made into strategic business units that have shown resilience to the current operating environment challenges posed by, among others, the pandemic,” he said in a special trading update for the first quarter.

The significance of online platforms has been gradually rising in the last decade, but the Covid-19 pandemic had accelerated the development.

A recent study by GlobalWebIndex, 68 percent of consumers said they were now searching for coronavirus-related news on the internet, making it the biggest online activity.

Mr Sithole said the growing opportunities in the electronic media sector and the commercial printing units will be harnessed with investments in television and exercise book printing compensating for the lost print revenues.

Mr Sithole said Zimpapers will continue to aggressively drive its digital strategy.

“In line with the diversification strategy, the company will continue to look at opportunities in the digital media and technology-related solutions,” he said.

A key part of the digital first strategy is the targeted launch of Zimpapers Television Network as a fully-fledged broadcasting channel.

In the first quarter, Zimpapers took a knock due to a difficult operating environment typified by inflationary pressures and waning demand, with volumes across most divisions going down.

The newspapers division suffered a 22 percent volume decline, while the radio broadcasting division declined by five percent, while the commercial printing division recorded a 31 percent volume growth driven by strong demand for labels.

However, cartons recorded a 54 percent decline and printing inserts for newspapers a 76 percent volume decline owing to low demand and challenges in securing foreign currency to procure raw materials.

On a positive note, traffic on the company’s digital platforms increased as people accessed information online as their primary source during the lockdown.

The emergence of Covid-19 in Zimbabwe, which led to an initial three-week lockdown from March 30, also worsened the group’s operations.

During the first two weeks of the lockdown, Zimpapers’ advertising sales for the newspaeprs division fell 60 percent and copy sales by 40 percent, as businesses could not operate and people movement and street sales were halted.

The group’s commercial printing and the radio broadcasting divisions were not spared either as their volumes slid four percent and 15 percent, respectively.

“However, following the easing of the lockdown, the company has started to recover its lost volumes across all the divisions.

“In contrast to the performance by the traditional products, the online television project ZTN, has shown resilience and recorded a six percent volume growth when compared to target as people were spending more time on good television programming content during this lockdown period,” said Mr Sithole.

Although the group faced a number of operational challenges during the first two weeks of the lockdown, including tight cash flows, additional cost increases and supply chain logistical challenges, the group is in a stronger position going into the second quarter and beyond.

“The company remains a going concern and solvent as supported by a strong balance sheet that will allow it to meet its future survival needs.

“The company will also use its institutional strategies on managing relationships with its stakeholders to ensure appropriate support when needed. Clear plans for both short and long term financial needs have been put in place as the company comes out of the Covid-19 depressed performance,” said Mr Sithole.

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