Gary Allen Chief Executive Officer for Radio Jamaica Limited (RJRGLEANER) has released the following unaudited financial results of the RJRGLEANER Communications Group (The Group) for its first quarter ended June 30, 2022.
A number of factors related to local and global economic conditions had an adverse impact on Group performance during the quarter. Instability in global commodity markets precipitated by the Russia/Ukraine war, lead to an unprecedented rise in inflation globally, and further exacerbated those supply chain challenges which emerged during the pandemic.
In response to dampening consumer demand, advertisers appear to have reduced spending in anticipation of a return to more normal conditions in the short to medium term. The Group has at the same time faced significant upward price pressure on its input most notably, energy and newsprint.
Preliminary revenue performance for the month of July 2022 shows a marked recovery in advertising revenue, and we have also been pleased to note more recent reductions in energy prices as well as a downward trend in global freight rates which should assist in improving market conditions.
The Group recorded a pre-tax loss of $51 million and an after-tax loss of $40 million for the quarter, compared to a pre-tax profit of $148 million and an after-tax profit of $110 million for the similar prior year period.
Primary contributors to this quarter’s performance were: –
• A 9% decrease in the Group’s revenues, driven mainly by decreases in the Audio/Visual division (12%), Print and Online (6%) and Audio (2%). There was a decline in some activities in the current year due to, the protracted impact of COVID-19, non-reoccurrence of revenues from Ministry of Education, and as mentioned before, softness in the overall advertising market due to businesses continuing to experience supply chain challenges, higher global inflation and the wider economic effects of the Russia/Ukraine war.
• Other income increased by more than 100% compared to the prior year period, due mainly to one-off proceeds from a negotiated confidential settlement.
• Direct expenses were higher than the prior year, due mainly to increased newsprint costs, increased costs for the staging of the Boys’ and Girls’ Championships, along with the higher cost for the National Track and Field Trials.
• Selling expenses increased by $16 million (7%) driven by increased distribution-related commissions as well as increased marketing activities and events that were suspended in the previous year.
• Administrative expenses fell by $21 million (6%) compared with the prior year, driven by savings from cost containment measures
• Other operating expenses increased by $25 million (13%) compared with the prior year, due mainly to increased utility costs, higher technology license fees and higher transmitter and other equipment maintenance costs.
The results of the first quarter reflect the challenges of the local market as previously described above. That said our usual quick responses to adjust the business to meet market challenges are already being employed. The positive impact of our ongoing targeted efficiency projects and efforts will also assist in bringing our targets back in line.
The challenging first quarter did not dampen the strong advancement in our digital transformation drive, and we made good progress in moving the television Digital Switch Over (DSO) project forward. Our overall digital revenue performance continues to improve as our various digital assets garnered more revenues from more digital streams than before.
During the quarter under review, we also announced an agreement by our Board with that of 1834 Investments Limited, to acquire the assets and liabilities of that listed company with a Net Book Value of over $1.5Billion. The transaction, on completion will see an increase in the asset base of RJRGLEANER, an increase in available cash to complete our strategic digital investments, including DSO, and will also secure the 7 North Street headquarters of our subsidiary, The Gleaner Company (Media) Limited, which is now being leased. Should the shareholders of 1834 Investments and the Courts approve the transaction on August 10t 2022, it will take our RJRGLEANER business into another phase of growth and expansion, to which we look forward.
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