Enock Kamushinda, ever the optimistic, and a strong believer in the land reform programme, seems to be having a hard time turning around Zimpapers, the country’s largest newspaper group. The company, which publishes two dailies, the Herald and the Chronicle; and two weeklies, The Manica Post and Kwayedza, and two Sunday papers, the Sunday Mail and the Sunday News; had a net loss of $405.9 million down from a loss of $42.4 million the previous year.
According to its results for the year ending December, it appears that the company’s biggest problem is containing costs. Sales more than doubled from $2.3 billion to $5.2 billion. Cost of sales soared from $1.5 billion to nearly $4 billion. The gross profit of $1.3 billion was wiped out by operating expenses which more than doubled from $787 million to $1.7 billion. Selling and distribution expenses more than doubled from $334.3 million to $747.1 million. Administration expenses increased from $428.9 million to $861.6 million and retrenchment costs rose from $23.8 million to $51.9 million.
The operating loss of $255.8 million, down from a profit of $20.7 million the previous year was worsened by finance costs. Despite the low interest rates that have been prevailing since 2001, the company’s finance costs doubled from $77.2 million to $154.4 million resulting in loss before taxation of $410.2 million compared to a loss of $56.5 million the previous year.
Apparently, the printing division did quite well recording an operating profit of $172 million, more than double the previous’ year’s profit of $71 million. This would imply that the newspaper division made a loss of more than $400 million. The company says the newspaper division’s operations were affected by escalating input costs with newsprint increasing by more than 300 percent. The shortage of fuel, which has since worsened, is also said to have affected sales due to late deliveries.
Kamushinda says operational changes that have been introduced will see the newspaper division once again take its leading position. He also believes that the late rains caused by Cyclone Japhet are likely to result in increased agricultural output. This, together with the new producer prices for maize and wheat, should see people with more cash that will enable them to buy newspapers and other products of the company.
But some people believe that unless Zimpapers changes its editorial stance, the newspaper division will continue to suffer. The newspaper group has been facing a credibility crisis since Bornwell Chakaodza took over as editor in the run up to the 2000 elections. Though he was fired after the appointment of Jonathan Moyo as Information Minister subsequent editors have failed to turn the papers around with its greatest hope, Tommy Sithole, being removed before he could turn the flagship Herald around.
Zimpapers, even during its days under the Rhodesian Printing and Publishing, has always supported the government of the day, but the blind loyalty that Moyo is demanding is costing the company heavily. Its stable, particularly Chronicle, seems to be obsessed with conspiracy theories about groups that want to overthrow the government.
Its bias is so blatant that when the opposition Movement for Democratic Change won the Kuwadzana and Highfield seats, the story was relegated to page 2 yet this was a story of national interest whose results and analysis every reader had been waiting for. Instead the paper led with a story about MDC security agents revolting over pay. Though this could have been a good story on any other day, coming on 1 April, the story was probably brushed off as a Fools Day joke.
But Kamushinda says the company’s prospects are bright. He says management has already put in place measures that will see the group return to profitability. The printing division is intensifying its export drive. And the market seems to be gaining confidence in the company. Its share price which languished at around one dollar for the whole of last year, rose by 110 percent in the first quarter of this year to 210 cents.
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