Our opinion on the current state of CAT

Caxton and CTP Publishers and Printers Limited, operating in the challenging landscape of print and publishing, are navigating through the digital transformation affecting their industry. The company's efforts to adjust by reducing costs and transitioning towards digital platforms highlight its proactive stance against the steady erosion of advertising revenue and the decline in magazine purchases exacerbated by the digital age. The year ending 30 June 2023 showed a commendable increase in revenue by 16.6% and a 20.2% rise in headline earnings per share (HEPS), driven by price adjustments to cover significant raw material cost increases and volume growth in the packaging sector, despite the static volumes in newspaper and commercial printing.

However, the trading environment has become increasingly challenging, with consumers grappling with inflation, stagnant economic growth, and the persistent issue of loadshedding, leading to an anticipated decline in HEPS of between 4.1% and 8.5% for the six months ending 31 December 2023. This scenario reflects the broader struggles faced by the print and publishing sector, not just in adapting to digital disruptions but also in dealing with macroeconomic pressures that dampen consumer demand.

Caxton's strategic adjustments and the resilience shown in its financial performance underscore the complexities of operating within a transitioning industry. The upward trend in the share price since breaking out of an island formation in 2021 suggests a cautious optimism among investors about the company's ability to navigate through these changes. As Caxton continues to evolve in response to the digital shift and economic headwinds, it will be essential for the company to further innovate and diversify its offerings to sustain growth and profitability in the evolving media landscape.