Business
Covid-19, political crisis hit Press Corporation
April 21, 2020 / Wahard Betha
Malawi’s largest conglomerate Press Corporation Limited (PCL) says its general business remains at a low ebb in light of continuing uncertainties due to the political crisis following the nullification of the May 2019 presidential elections and the outbreak of the coronavirus pandemic (Covid-19).
In a summary of audited results for the year ended December 31, 2019 signed by the CEO George Partridge, the MSE Listed Group says the political crisis and Covid-19 pandemic created an unhealthy environment for its business in 2019 and are likely to continue stifling business in 2020.
Partridge says: “Covid-19is likely to continue to have an impact on the Group’s general productivity and business as supply chains world-wide are severely disrupted.”
“Management is closely monitoring the pandemic and taking all necessary precautionary and mitigation measures.”
Partridge says nullification of the presidential elections and post elections disputes in 2019madePCL’s operating environment a challenging one whereby the dual factors created business uncertainty for consumers forcing them to be spending less on goods and services.
He says the unprecedented low consumer spending impacted the revenue generation of the conglomerate resulting in the Group registering only 3% growth which has generated pressure on working capital and has culminated in a 131% increase in net finance charges.
The Group delivered a profit after tax of MK24.76 billion (2018 MK36.71 billion) representing a 33% decrease from 2018.
However, some of the conglomerate’s subsidiaries performed brilliantly in 2019 including National Bank of Malawi which registered an after tax profit of MK17.1 billion from MK15.97 of 2018 representing a 7% increase.
In the energy segment (ethanol manufacturing), there are also strong results with a 53% increase in earnings.
Partridge says: “The performance was driven by the continued satisfactory performance by PressCane which registered a 10% growth in its earnings and similarly, Ethanol Company (EthCo) registered a 346% growth in its earnings from the loss made same period last year.”
“The loss by EthCo was driven by increased utilization capacity due to the availability of raw materials from carry-over stocks and improved sales volumes.”
But the Group which owns stakes in landline operator Malawi Telecommunications Limited (MTL) and cellular network operator TNM has recorded a 33% profit decline from the telecommunications sector and a 10% decline in its net earnings following the a once-off restructuring expenditure of MK104 billion, a stock write-off of MK450 million and increase in depreciation expenses as a result of heavy capital investment made over the past three years to reposition the companies for sustainable growth.
“Plans are underway to identify a strategic partner in MTL,” he says.
In the consumer goods segment in which PCL owns a retail chain People’s Supermarket, the conglomerate has reported losses of up to 44% as a result of 21% decline in sales revenues due to closure of a number of stores following restructuring of the business, attendant restructuring costs, and a 61% increase in interest costs.
“Directors are weighing various equity re-capitalisation options to deal with the company’s unstable debt position. The search for a strategic investor is continuing.”
Partridge pledges to continue with the Group’s efficiency drive and initiatives that will help to turnaround the companies that have under-performed.
He says: “During the year, a diagnostic study revealed that part of the underperformance of these companies is on account of severe under-capitalization which requires urgent attention.”
“Management has already drawn up plans to remedy this. In respect of previously reported loss making companies, it is pleasing to note that Press Properties Ltd and EthCo have completely turned around and are profitable while Food Company Ltd is now significantly moving in the right direction.”
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