The printing and packaging group has taken steps to right-size its business, with the benefits expected next year and beyond.
Novus Holdings has reported a big drop in earnings after the Covid-19 lockdown resulted in magazines closing down and a sharp decline in demand for beverage labels due to the prohibition on alcohol sales. However, it says a restructuring of its operations will result in benefits in its next financial year and beyond.
The printing and packaging group said the publishing sector was worst hit in the six months ended September, with key customers announcing several title closures and a reduction in volumes and pagination. The Labels Gravure division was significantly impacted by the ban on sales of alcoholic beverages with production only normalising in the second quarter. The already contracting Print industry, together with shifts in advertising spend, further exacerbated the Print segment’s performance.
Novus said it was forced to retrench staff throughout the Print segment and its central office, with retrenchments costs of R6.3 million for the period. The remaining restructuring costs would be incurred in the second half of the year.
The Group continued with its objective of right-sizing the Print operations, reducing overhead costs and improving operational efficiencies,” Novus said. “This was especially imperative in the Group’s response to address the poor outlook of the Print industry.”
While its performance had been bleak, Novus said the first half of the year once again saw the recognition of the majority of contractual print work for the Department of Basic Education, with the second half expecting to show a smaller portion of this work.
Revenue for the six months fell 32% to R1.52 billion and it reported an operating loss of R9.2 million, down from a profit of R146 million last year. Earnings per share (EPS) fell 68% to 7.9c while headline EPS came in 84% lower at 4.8c. However, its free cash flow improved to R91.1 million from a negative R54.4 million last year.
The company’s shares closed unchanged at 93c in thin trade yesterday.