By Morris Aron
The Standard Group Limited has reported strong growth in the first six months of this year, even as volatile interest rates and the depreciation of the Shilling against major currencies ate into its bottom line.
Despite higher input costs, a rising cost base and doubled borrowing costs, the Group’s revenue trajectory reflects continued growth in the first half of the year.
Financial results released on Friday show that print circulation leapt 13 per cent in the six months to June 2012, while advertising on television and in print grew by six per cent. The Group posted a profit before tax of Sh150 million for the period.
“During the half year period under review, the economic environment remained challenging with high inflation and more than doubling interest rates,” the SGL board said in a signed statement. “The residual impact of the high cost of raw materials and the depreciation of the Shilling towards the end of last year increased the cost of production in the first quarter of 2012. The situation, however, eased in the second quarter.”
Total revenues grew to Sh1.7 billion from Sh1.5 billion over same period the previous year. Shareholders equity is up to Sh1.76 billion, while cash generated from operations hit Sh424 million, up from Sh359m.
A rise in interest rates saw borrowing costs double to Sh85m as of June 2012 compared to Sh48 million the previous year. Interest rates rose to an average of 24 per cent as a result of a tight monetary policy adopted by the Central Bank.
Extreme foreign exchange volatility saw the value of the Shilling against the dollar plummet to an all time low of Sh107. A weak shilling made it expensive to import at a time when, globally, the cost of newsprint had risen 38 per cent between first quarter of 2009 and 2010 as manufacturers cut production.
Meanwhile, the Group announced changes in its finance and management structures as part of an ongoing transition and succession management process.