More people opting to buy takeaways when there is load-shedding boosted Caxton’s largest segment by profit and the printing and publishing group has now entered the coffee cup market as it looks for new products.
The company, valued at about R3.7bn on the JSE, said on Friday in its results for the year to end-June that the sales of its varied packaging operations grew 28% year on year, with some of it coming from cold cups.
“In line with this strategy, we have also entered the coffee cup market and are confident of growing that sector,” the group said.
Meanwhile, the quick-service restaurants and bag in the box grew volumes 13.1% and 17.1% respectively, year on year.
“This growth was stronger in the first half of the year, owing to the increased levels of load-shedding which benefited the quick-service restaurants market as consumers seem to prefer to buy takeaway meals as the solution to the inability to do home cooking,” the company said.
Caxton was founded in 1980 as a print and publishing company which publishes a host of community newspapers and the national daily The Citizen, but it has since branched out into packaging, digital assets and stationery.
In terms of financials, its headline earnings per share (HEPS), a common profit measure in SA that excludes certain items, advanced 20.2% to 188.6c and total headline earnings 18.9% to R680.8m.
The dividend was increased 20% to 60c per share and its preference share payout 19.5% to 490c.
The pressure on its margins was mitigated by controlling its costs, with staff costs growing 6.9% and other operating expenses 7.7% versus the revenue growth of 16.6%.
Price hikes to recoup higher raw material costs and greater volumes sold in the packaging business drove the improvement in revenue.
Growth was muted in the second half of the year as the impact of high inflation and persistent power cuts filtered through to customers, which reduced demand, while there was greater competition.
“Margins are expected to remain under pressure as the more expensive stock is worked through,” the company said.
Looking ahead, Caxton warned there was “no doubt” that the new financial year would be tough because of the overall economic environment, as consumers have less to spend, which could lead to lower demand by retailers for its publications, printing services and, in turn, parts of the packaging side of the company.
“In the packaging markets, we are fortunate to service those sectors that often are less affected, being the alcohol, quick-service restaurants and cigarette sectors,” the company said.
“As always, the management of costs will be paramount. The group is fortunate to have large cash resources to deploy where we see opportunities either in our existing businesses or through acquisitions,” it added.
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