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NMG Half-Year Profit Plunges To Worrying Level, Board Cuts Off Dividend

Poor results have set Nation Media Group up for a big loss by the end of the year

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NMG Half-Year Profit: Nation Media Group, once a darling of investors at the Nairobi Securities Exchange (NSE) and a pace-setter in the media industry, is struggling to keep its head above the water, with revenues plummeting into uncomfortable territory.

It is telling that the regional media powerhouse posted a net profit to just Ksh2.9 million for the half-year period ended 30th June 2023, a major decline from Ksh247.8 million in the half-year of 2022. NMG attributed the decline in profitability to the rise in the cost of imported raw materials, especially newsprint which is it the main input in newspaper production, and the depreciation of the Kenya shilling against the US dollar.

The company had to absorb the incremental direct costs amounting to Ksh179 million, punching a huge dent in its profitability.  “The depreciation of the Kenya shilling against the US Dollar aggravated the economic slowdown that resulted in a 4.5% decline in the Group’s turnover compared to the same period last year,” it says.

The Group’s turnover fell by 4.5% to Ksh3.5 billion in June 2023 from Ksh3.7 billion in June 2022 while its Gross Profit declined to Ksh2.7 billion from Ksh3 billion over a similar period last year.

NMG pre-tax profit for the half-year fell to Ksh10.8 million at the end of June 2023 from Ksh354 million in H1 2022, setting it up for a possible loss by the end of the year barring a drastic change in fortunes.

The firm’s earnings per share was nil from Ksh1.3 per share in first half of 2022. This poor share performance could be the reason NMG carried out a second share buyback to shore up its equity prices and reward shareholders.

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In results published last week, the management said the adverse impact of increased costs was partially countered by reduced operating expenses resulting from improved operational efficiency and increased productivity. But even this did not help prop up profits.

The NMG board also blames its unimpressive performance to weak consumer spending caused by increased cost of living price, and increases in fuel prices and interest rates, for its weak financials.

NMG Total comprehensive income fell to Ksh190.5 million from Ksh219.4 million in a similar period 2022 while income attributable to owners of the firm fell to Ksh176.8 million from Ksh218.8 million during the period under review.

Innovative products

Performance during the first half of this year was, however boosted by growth of its digital footprint which saw a14% rise to 59.5 million users compared to 52.2 million users last year. “We continue to focus on innovation to develop products that resonate with audiences through an experiment-driven development approach to accelerate monetisation of our expansive digital footprint,” says the NMG Board.

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NMG says it registered continued growth in its niche products – Business Daily, The EastAfrican and Taifa Leo – as a result of what it describes as insightful content and partnership initiatives.

Considering the prevailing economic environment and the Group’s investment plans, the Board of Directors did not recommend payment of an interim dividend.

Bullish Outlook

The company says it remains confident that the investments it is making to accelerate product innovation, diversify revenue streams and transform the organisation into “an agile, customer-centric and data-driven media company” will deliver long-term shareholder value.

“In addition,” the board says,  “the recently completed newsroom integration and the ongoing implementation of our content strategy will entrench the group as the leading multi-media company offering unique and impactful content to our audiences. The Group is also optimistic that it will navigate the immediate business challenges posed by the implementation of the Finance Act 2023 (Kenya).”

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