Packaging operations drive Caxton to record full-year results

Group declares dividend as revenue grew by 16.6% to R6.974bn.
Caxton expects the upcoming year to deliver a more difficult economic environment with the impact of a constrained consumer starting to dampen demand. Image: Supplied

Load shedding and increased consumer demand for quick service restaurant services significantly boosted the performance of the packaging operations of JSE-listed Caxton & CTP Publishers, Printers and Distributors in the year to end-June.

Another record annual performance by the packaging operations contributed to Caxton’s record results for the full year, which were driven by revenue growth and a well-contained cost base.


Group revenue grew by 16.6% to R6.974 billion from R5 979.3 million.

Managing director Tim Holden said this growth was achieved on the back of price increases to recover the large raw material input cost increases and volume increases in the packaging business while volumes in the newspaper and commercial printing plants remained largely unchanged.

Profit from operating activities, after depreciation of R238.7 million, increased by 25.8% to R742.4 million.

This profit performance includes the effect of the group’s insurance claim for the catastrophic KwaZulu-Natal floods, which impacted the group’s Durban commercial printing plant.

Headline earnings per share increased by 20.2% to 188.6 cents from 157 cents.

A final ordinary share dividend of 60 cents per share and 490 cents per preference share dividend were declared.

Resilient performers

Holden said the record performance by the group’s varied packaging operations was driven by an about 28% increase in revenues as the markets they service experienced real organic growth.

He said that in the folding carton divisions, the quick service restaurant (QSR) sector and bag-in-the-box (BIB) markets again proved to be resilient performers.

The QSR business grew volumes by 13.1% and the BIB business by 17.1%.

“This growth was stronger in the first half of the year, owing to the increased levels of load shedding, which benefited the QSR market as consumers seem to prefer to buy takeaway meals as the solution to the inability to do home cooking.

“Some of this growth can also be attributed to new products and being able to secure volumes from our existing customer base, more specifically cold cups.

“In line with this strategy, we have also entered the coffee cup market and are confident of growing that sector,” he said.

Holden said the BIB volume growth benefitted from the increased presence of wine brands moving to this packaging format, while the traditional brands showed a marginal decline in volume.

He does not expect the smaller 2023 wine harvest to impact the demand for BIB because the bulk wine segment offers real value to cash-strapped consumers.


Holden said the fast-moving consumer goods (FMCG) sector showed no overall volume growth as certain customers were affected by load shedding, but this was offset by growth in the agriculture market.

The group’s short- to medium-run label manufacturers in the Western Cape returned results similar to the prior year.

Holden said this was predictable in light of a challenging environment where wine and spirit label volumes declined due to a poor second half where inflation impacted demand.

He said the operation also faced uncertainty around the continuity of the Langeberg & Ashton business of Tiger Brands, which resulted in reduced label offtake.

Read: Tiger Brands confirms plan to sell loss-making fruit canning plant

However, Holden said this was offset by market share growth in beverages, where the increased Coca-Cola allocation had a positive impact.

Holden said the group’s flexible packaging operation in the Western Cape delivered stellar results by successfully integrating and leveraging acquisitions, new customers and gaining market share in the existing customer base.

He said the unit benefitted from the acquisition on 1 August 2022 of the Amcor business in South Africa and also the lamination business of Allflex on 1 May 2023, which will both support its growth in providing BIB bladders and supplying the laminated substrate to other bladder manufacturers.

Read: Caxton acquires operations of Amcor Flexibles SA for R90m

Holden said its beverage flexible label market showed growth on the back of an increased allocation from Coca-Cola while the long-run label operation, serving the major beer brewers, has benefitted from the recent investments in more equipment.


He said the group’s cigarette carton manufacturing operation continues to face volume decline from its largest customer, but the unit has done well to more than offset this by securing customers and increased volume offtake in other African regions.

Stationery and commercial printing

Holden said the group’s small stationery operation delivered excellent results, with the 18% growth in revenues driven by the recovery during the back-to-school period of their largest retail customer.

The group’s commercial printing operations produced a good set of results driven by a 2% increase in tonnage throughput and, to a large extent, the successful recovery of large raw material input cost increases.

Holden said most of the group’s commercial printing customers had renewed their print commitments with the group.

However, the extent of volume offtake will remain uncertain because consumers are feeling the pinch, and this could necessitate a pullback in advertising brochures by retailers, he said.

Holden said the group’s local newspaper business had a difficult year, especially from a local revenue perspective, where the incessant high levels of load shedding impacted local businesses and had a knock-on impact on their advertising spend.

But Holden said this was compensated for by a reasonably strong national advertising performance, which grew by 7%, largely driven by the grocery and liquor retailers.

“This provides the solid base from which we have to pursue new markets and customers that fit our media profile and to whom we can provide wide access to households and decision-makers.

“In order to drive this, we have developed a new commission structure for the sales team that will hopefully bear fruit,” he said.


Holden said the group’s daily newspaper, The Citizen, delivered a reduced level of profitability in the face of declining advertising revenues and increasing printing costs, which have not been mitigated by other overhead savings.

The group’s newspaper printing plants improved profitability despite tonnage throughput declining by 6% and the facilities being heavily impacted by load shedding and diesel costs.

The book and magazine printing operation in the Western Cape had a challenging year with continued uncertainty over textbook demand from various government education departments.


Commenting on the group’s prospects, Holden said there is no doubt the upcoming financial year will deliver a more difficult economic environment with the impact of a constrained consumer starting to dampen demand.

Holden said this, in turn, could reduce demand from retailers for their media publishing and printing business and could impact certain segments of the group’s packaging markets.

But Holden said the group is fortunate that in the packaging markets, it services those sectors that often are less affected, such as the alcohol, QSR and cigarette sectors.

Shares in Caxton declined by 0.91% on Wednesday to close at R10.90 per share.

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Disclosure: Caxton’s majority shareholders are also majority shareholders in African Media Entertainment (AME), the owner of Moneyweb.



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