By Jo Francis for Printweek
Antalis has described its first half performance as “resilient” in the face of declining overall demand for paper and supply issues caused by events at the Arjowiggins paper mills. However, one-off costs have resulted in increased losses for the period.
The group is the biggest distributor of paper, packaging, and sign and display materials outside of the USA. It has been working to establish a new shareholder structure since February, and its majority shareholder Sequana went into liquidation in May.
Antalis said the search for a new shareholding structure, with support from Goldman Sachs, continued and was “proceeding in line with the plan”.
The group’s results for the six months to 30 June were in line with its preliminary figures announced in July. Turnover fell by 5.4% to €1.072bn (£950m) on a like-for-like basis, while EBITDA was down by nearly 10% at €30.1m (2018: €36m).
The Papers business suffered a sharp decline in sales of 7.6% to €714.1m, growth at its Packaging business was described as “weak” with sales nudging up 0.3% to €254.2m, while Visual Communications was “stable” with sales down 2.4% at €103.9m.
The bottom-line loss for the period increased from €16m to €27m, with one-off costs including a €10.2m asset writedown mainly related to goodwill at its Latin American business, and restructuring costs of €9.8m. The group also implemented accounting standard IFRS 16 for the first time, which resulted in a further €3m hit to the figures.
Sales in the UK and Ireland slipped by 5.6% to €282m, with Antalis describing market conditions as “difficult… notably due to Brexit” although the UK did better than the general market contraction.
Chief executive Hervé Poncin said: “In H1 2019, the group’s operating performance was impacted by the decline in volumes of Papers in a market that contracted by around 7%, and by the bankruptcy of one of our graphic and recycled papers suppliers.
“Against this backdrop, we have continued to adapt our structure to changing patterns of demand and we have significantly reduced our overheads, particularly our logistics and marketing costs.”
Arjowiggins Graphic had supplied around 4% of the group’s purchases, in value terms.
Antalis stated that it had complied with its banking covenants and had strengthened its liquidity with an amended factoring agreement. This has increased its facility from €215m to €290m through the inclusion of an additional finance partner.
Net debt fell by 4.1% to €318m, although under IFRS 16 the net debt figure increases to €434m.
Sales at the group’s Papers division are expected to continue to decline, although it expected a better second half now the situation at Arjowiggins Creative Papers in the UK had been successfully resolved.
“In H2 2019, Antalis should benefit from the launch of new ranges of recycled products and the relaunch of Arjowiggins Creative Papers ranges following its management buyout. Packaging and Visual Communication should show resilience over the coming months and continue to grow their contribution to the Group’s consolidated gross margin,” the group stated.
It anticipates that full year sales will be down by between 6%-7%, with EBITDA margin of 2.7%-2.9%.
Antalis shares fell by 14% to €0.90 after the announcement.
By Adam Rowe for Forbes
In 2015, adult colouring books became the dark horse of the publishing industry, as a surprising surge in sales boosted major players’ revenues. In 2016, there was no end in sight. In 2017, the bottom fell out of the adult colouring book market and, this year, the trend is officially dead.
So it seems, at least. It’s possible that adults still enjoying colouring as much as ever, but independent publishers — whose sales numbers aren’t reported with the same rigour as those of traditional publishers — have cornered the market. Here’s a dive into the timeline of the adult colouring trend, as told through the cottage industry of articles covering the phenomenon.
A July 2015 New Yorker article described the early stage of the adult colouring renaissance, noting a connection to the popularity of other infantilising activities like adult summer camps and adult preschool. The trend was picking up, even if the numbers hadn’t come out yet: Dover decreed August 2, 2015, as the first National Colouring Book Day, and Bantam Books and George R.R. Martin teamed up on a Game of Thrones-themed colouring book. In December, Business Insider profiled a self-publishing colouring book creator who had earned $329,000 in Amazon royalties in 2015 alone, by selling her books via Createspace — noting that colouring books were at the time holding five out of the top 10 spots on Amazon’s hourly-updated bestsellers list.
The colouring book sales spike continued across 2016, to much media attention as numbers came to light: Nielsen Bookscan estimated 12 million colouring books sold in 2015, up from a paltry one million the year before. The hot takes were entertaining: America’s obsession was a cry for help, while studies showed colouring exercises reduced symptoms of depression and anxiety. Retailers doubled down on art supplies and colouring books. The Canadian company Newbourne Media LP released a music CD/colouring book combination product. Adult nonfiction books across the industry sold 12% better in the first half of 2016 than the same period in 2015, and Publishers Weekly credited colouring books.
In 2017 the cracks began to show. Barnes and Nobles’ third-quarter profits, released in March 2017, revealed sales were under expectations, though still strong, and the decline in colouring book (as well as Adele album) sales was responsible for “nearly one-third of the sales decline.” By August, the trend was declared dead.
But did interest in adult colouring books really wane, or was it diverted away from traditional publishers and towards the retailer to rule all retailers, Amazon? The evidence lies in a slide from a 2016 presentation by Author Earnings, one of the more authoritative analysts in the murky world of book data. A chart breaking down online book sales by genre shows that about 60% of crafts/hobbies/games books in 2016 were being sold by non-traditional publishers (indie self-publishers as well as Amazon imprints). That’s a huge percentage, second only to the formidable romance genre, and it indicates that in 2016, the year that Barnes and Noble’s third-quarter colouring book profits began levelling off, most online craft book sales went to Amazon and self-publishers.
In other words, book publishers might have lost their colouring book market share to the same retail giant who endangered their industry in the first place.
Author Earnings hasn’t offered comparable data in 2017 or 2018, and major industry databanks like Bookscan don’t track Amazon’s data, so it’s impossible to say for sure whether the colouring book craze is really over or whether faster-adapting colouring book self-publishers have used Amazon as a channel to scoop up the majority of what was once traditional publishers’ cash cow. But as publishers turn to the digital audiobook as the next popular format (sales are up 32.1% in Q1 2018!), they should be wary of Amazon’s growing interest in audiobooks.
MTN lost almost two-million subscribers in South Africa in the six months to June and service revenue growth slowed by 3.3 percent in a stubbornly weak economy.
MTN, Africa’s telecoms giant, said it had 1.9 million less local subscribers compared to December, bringing the total subscribers to 29.2 million in the period under review, as price-sensitive consumers opted for cheaper data offerings.
It has 1.1 million fewer active data subscribers, although postpaid customers increased marginally by 0.1 percent to 5.6 million.
MTN chief executive Rob Shuter said that the 1GB promotion had contributed to the decline.
“We had our famous 1GB promotion, which we decided was not generating value and we pulled it out of the market. A lot of those SIMs have since become dormant and contributed to the drop in prepaid users,” he said.
Shuter said delayed payments under the network roaming agreement with Cell C resulted in a R393-million impairment.
“We are evaluating a sustainable solution to the agreement with Cell C,” Shuter said.
The domestic prepaid service revenue declined 5.5 percent on the introduction of out of data bundle rates and regulations by the Independent Communications Authority of South Africa (Icasa).
Commenting on the recent release of the policy on high-demand spectrum and policy direction on the licensing of a Wireless Open Access Network, Shuter said it was a move in the right direction, and lacked detail.
“We are still not clear how much spectrum will be available to mobile operators,” said Shuter.
Overall the MTN group had strong subscriber growth of 7.7 million in the first six months of the year to reach a total of 240 million subscribers.
By Siseko Njobeni for Business Live
The tough economy is behind the shock decline in Sun City’s value.
Sun International has for the first time reduced the value of Sun City as a struggling economy brought pressure on the iconic resort and casino.
The R306m reduction in value to R2bn comes after the company spent R1bn on refurbishments at the Sun City complex in 2016.
The drop in the resort’s value attests to the difficulties facing SA’s leisure and retail sectors due to increased competition, sluggish economic growth and reduced discretionary consumer spending.
By Tehillah Niselow for Fin24
The official unemployment rate increased by 0.5% to 27.2% in the second quarter of 2018, up from 26.7% in the first three months of the year.
Statistician-General Risenga Maluleke released the Quarterly Labour Force Survey for April, May and June in Pretoria on Tuesday.
The increase in the unemployment rate was due to a decline of 90 000 people in employment, as well as an increase of 102 000 people who became unemployed. Additionally, the number of discouraged job seekers rose to 2.9 million people, between the first and second quarters of 2018.
Manufacturing has lost 55 000 jobs year-on-year, and Maluleke said that basic metals and food production were the main drivers of the employment losses in the sector.
The industry hardest hit by job losses was manufacturing, with 105 000 people becoming unemployed in that sector in the second quarter. Community, social and services recorded a 93 000 jobs contraction, and 57 000 employment positions were cut in trade.
The transport sector accounted for the largest increase in jobs, with 54 000 new positions in the second quarter, while mining added 38 000, private households 22 000 and utilities increased by 18 000.
Of the 20.2 million South Africans aged 15 to 34 years, the number of young people not in employment, education and training (NEET) increased by 0.4% in the second quarter year-on-year.
This rate increased for black African males and white males. The female rates of NEET was recorded at over 40% among black African females aged 15 to 34 years old.
“Black women are the most vulnerable when it comes to unemployment,” Maluleke said.
Information technology (IT) hardware is likely to become more expensive in SA because of the weak economy and rand, according to Mark Walker, associate vice-president for sub-Saharan Africa at the International Data Corporation.
“SA is looking at a growth rate of 0.7% to 1.5% [in 2018]. Many organisations are pricing this weak economy into their discussions as it means that hardware and imported equipment will be more expensive.
“There are also murmurs around adding VAT to petrol and potential increases in taxes, so the technology sector could very well be an easy target from a tax point of view.”
As a result, IT was expected to become more expensive, particularly hardware, and this was likely to prompt “an acceleration into cloud-based computing”, Walker said.
Further, if the outcome of the ANC’s elective conference was not well received, the market would weaken further and this would further fuel the rise in IT costs.
Innovation and investment could be affected by the lacklustre economy, he said. “We have started seeing a trend emerge where you have individuals and organisations innovating locally, but then taking those ideas overseas because they are not able to unlock investment in the local market.”
However, a favourable elective conference outcome would be a boon for the local IT sector.
“The perception that SA is back on track could herald in a period of release of pent-up demand, investment spend on innovation and rolling out the infrastructure to enable broadband in rural areas, fibre and others that SA gravely needs.”
South African packaging and paper company Mondi said on Thursday underlying operating profit for the first quarter of 2017 was down 6% due to lower selling prices and inflationary cost pressures.
Underlying operating profit fell to 252-million euros ($274-million) in the three months through March from 269 million euros a year ago, Mondi, which is also listed in London said in a statement.
The figure was up 12% on the fourth quarter last year due to higher sales volumes and prices.
“Strong sales volume growth was more than offset by a significantly lower forestry fair value gain, inflationary cost pressures and lower average selling prices,” the company said.
The packaging paper division was impacted by lower selling prices for containerboard, while significantly lower gains on the value of its forestry assets, lower average export selling prices for hardwood pulp and white top kraftliner products, and a stronger rand impacted the South Africa division.
“As previously advised, we are experiencing some inflationary cost pressures across the Group and the forestry fair value gain is expected to be lower than in 2016,” the company said.
*($1 = 0.9195 euros).
By Nqobile Dludla for www.moneyweb.co.za
The “Oracle of Omaha”, Warren Buffet, has dropped Walmart from his portfolio like a ton of bricks, pronouncing ominously that a retailer in decline is difficult to turn around.
Buffett’s Berkshire Hathaway investment vehicle sold off $900-million of Walmart stock in the last quarter, or about 90% of what he had left after years of slowly reducing his holding in the biggest big-box of all.
Pundits the globe over are seeing Warren Buffett’s rejection of Walmart as symptomatic of a broader malaise in traditional retail, embattled as it is by rocketing online sales.
“It is a big, big force,” he pronounces in doom-laden tones, “and it has already disrupted plenty of people and it will disrupt more.”
He avers that many businesses have worked out neither how to cash in nor how to counter it, a view which no doubt informed his Walmart decision.
Brick and mortar retailers had better figure out, and fast, how to compete with the online version or the carnage will continue.
Plush is one of the strongest growth categories for news agencies.
Stationery sales at news agencies dropped markedly in the pre-Christmas period according to the latest “benchmark survey” by news agency owner and commentator Mark Fletcher.
Fletcher, a director of franchise group newsXpress and software company Tower Systems, says the December 2016 quarter for traditional news agencies was “dreadful” with 85% of surveyed businesses reporting a decline in stationery sales with the average decrease being 2,7%.
The latest survey covered 171 news agencies – large and small, city and country, shopping centre and high street and from all Newspower, the various versions of Nextra and newsXpress as well as independents.
The overall results:
- Customer traffic – 67% of news agents report average decline of 2.6%;
- Overall sales – 63% reported an average revenue decline of 3.6%;
- Basket depth – 65% report a 1.2% decrease in basket size;
- Basket dollar value – 67% report a decrease in basket value of 2.1%; and
- Discounting – 27% of respondents use a structured loyalty offer such as points or some other discount.
Benchmark results by key departments:
- Magazines – 78% report an average decline in unit sales of 11.7%;
- Newspapers – 81% report average decline in over the counter unit sales of 11.6%;
- Greeting cards – 52% of report average revenue increase of 2%;
- Lotteries – 58% of those with lotteries report average decline of 2% in transactions;
- Stationery – 85% of news agents report a decline, with an average of 2.7%;
- Ink – 22% of stores report ink separately. Of these, 51% reported increase of 2%;
- Gifts – of the 72% with gifts, 74% report average growth of 6.9%;
- Tobacco – pf the 44% with tobacco, 85% report an average decline of 11%;
- Confectionery – of the 51% with confectionery, 60% report an average decline of 4%; and
- Toys – of the 16% with toys, 80% report growth of 6.7%.
On a brighter note, Fletcher says a third of participating news agency businesses doubled gift sales in the December 2016 quarter compared to 2015.
“The most successful news agency in gifts did over $100 000 in gift sales the quarter. This is a regional news agency in a high street situation,” he says. “The most successful news agency in the plush category did over $70 000 in plush revenue in the quarter.”
The share price of Wallmart’s South African subsidiary Massmart fell 4.4% to R111 on Tuesday morning after it reported overall sales growth excluding new stores failed to keep pace with inflation.
Massmart reported sales for the 44 weeks to October 30 excluding new stores was 5.3%, lagging behind product inflation of 6.4%.
Including new stores, sales grew 7.6% to R73.2bn from matching 44 weeks in 2015.
“Sales growth has declined, reflective of the tough trading conditions in SA and, more recently, in most African countries where we have stores,” the company said in its sales update on Tuesday.
“Although slowing marginally food and liquor sales continued to perform well and Massbuild is showing signs of a sales recovery. General merchandise sales remain compromised by low consumer confidence, drought-affected food inflation and higher-priced imported products.”
Massmart splits itself into four divisions.
Fastest sales growth of 10.7% was reported by Masswarehouse which houses the Makro and Fruitspot chains. Excluding new stores, sales growth was 7.5%.
Next was Masscash whose brands include Jumbo, Shield, CBW, Rhino Cash & Carry, Tridant, Saverite and Cambridge Food. It increased by 7.9%. It appears to have closed numerous outlets since same-store sales growth was 8.5%.
Massbuild — which houses Builders Warehouse, Builders Express, Builders Superstore and Builders Trade Depot — grew sales 5.7%. Excluding new stores, sales growth was a more muted 1.1%.
Game and DionWired division Massdiscounters increased sales by 4.6%, but only by 0.5% when excluding new stores.
By Robert Laing for www.businesslive.co.za