Kampala, Uganda – The New Vision Printing and Publishing Company Ltd has issued a notice to current and potential shareholders, warning of anticipated losses for the fiscal year 2022/2023. Managing Director Don Wanyama attributed these potential losses to a preliminary assessment by the Board of Directors, which suggests a deficit for the year ending June 30.
Wanyama cited various factors contributing to the company’s challenges, including rising input costs, such as newsprint and raw materials, driven by global supply chain disruptions. These issues have adversely affected the company’s performance. New Vision generates its revenues primarily from printing, followed by broadcasting (radio and television), commercial printing, and other sources.
Wanyama noted that the most significant factor impacting the company’s performance is the challenging business environment resulting from slow post-COVID-19 recovery, which has affected newspaper sales and advertising revenue across various platforms.
New Vision’s financial stability has been fluctuating over the past five years, which some attribute to the rapid expansion of the company from a print-focused entity to a multiplatform media organization. This expansion included the acquisition of radio and TV stations and privately-owned newspapers in rural areas, a move that raised concerns among analysts about its long-term impact on the company’s performance.
In the fiscal year ending December 2019, the company reported a net profit of 1.595 billion Shillings, but this turned into a loss of 1.375 billion Shillings the following year, primarily due to strict anti-COVID-19 lockdown measures. In the 2020/2021 financial year, New Vision recorded a loss of 985.5 million Shillings, but it managed to rebound with a post-tax profit of 988.7 million Shillings in 2021/2022.
Despite a record jump in sales revenues from 81.9 billion to 111.4 billion Shillings, the company’s profit growth was constrained by significant expenses of 24.9 billion Shillings for outsourcing the printing and publishing of educational materials.
Half-year results for the period ending December 2022 indicate a profit of just 57.35 million Shillings, a decline from 396.5 million Shillings for the same period in 2021. The slow economic recovery from the COVID-19 pandemic continues to impact the revenue streams of media organizations. This situation is exacerbated by economic restructuring resulting from the pandemic, which has disrupted sales and advertising projections.
During this period, New Vision saw a 3.15% decrease in advertising revenue, a 12.5% decline in circulation sales, and a significant 77.7% drop in publishing revenues. However, there was a 29.9% increase in revenue from commercial printing.
The electronic media segment also faced challenges, with a 23.2% decline in radio advertising revenue, a 4.53% decrease in TV revenues, and a 2.86% reduction in print advertising. Notably, the company secured a certificate for mass production of Ministry of Education and Sports educational materials for Senior Three and Senior Four, resulting in revenues of 4.38 billion Shillings and outstanding debts of 8.28 billion Shillings.
Although publishing contributed 10% to total revenue during this period, it accounted for 9.18% of total costs. Despite notable increases in outstanding receivables, mainly due to slow debt recovery, the company remains affected by the accumulation of trade payables.
In anticipation of potential risks and uncertainties during the Kenya general elections in August of the previous year, New Vision increased its inventory levels of commercial paper, newsprint, printing inks, and materials, further affecting cash flow and working capital availability, ultimately impacting the company’s profitability.