Nation Media Group Issues Profit Warning After 99 Per Cent Decline In Profits

The Nation Media Group (NMG) has issued a profit warning, anticipating a more than 25 per cent decline in full-year profits for the year ending December 2023.

A notice issued by Company Secretary Angela Namwakira on Wednesday, October 25 revealed that a tough business environment has impacted the company, thus its warning to its shareholders, investors, and the general public that it would record depressed earnings, the second such warning in 10 years.

Namwakira attributed this to a struggling media business in Kenya adversely impacted by headwinds mainly attributable to the relentless increases in prices of basic commodities, a drastic rise in fuel prices, runaway depreciation of the Kenya Shilling, rising interest rates and higher taxes.

"Combined, these factors have led to depressed consumer spending and increased costs of doing business," she stated.

"In addition, the increase in global prices of newsprint coupled with a weakened Kenya Shilling against the US Dollar and higher distribution costs arising from fuel prices have resulted in significant incremental direct costs compared to the previous year."

She however stated that unlike most businesses, offsetting these incremental costs by passing them to consumers through a price increase is not tenable, adding that the costs were however partially mitigated by cost containment initiatives and improved productivity.

"Consequently, the Board of Directors, having reviewed the Company's performance forecast for the current trading period, has determined that the earnings for the financial year ending 31 December 2023 will be lower than the earnings for the previous year by at least twenty-five per cent," she added.

Namwakira however underscored the Board's confidence that the investments NMG has made 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 recently completed newsroom integration and ongoing implementation of our content strategy will entrench the Company as the leading multi-media company in the region, offering unique and impactful content to our audiences," she continued.

On Friday, August 18, NMG recorded a 98.8 per cent decline in net profit from Ksh247.8 million in the 2021/2022 financial year to Ksh2.9 million in 2022/2023, with the regional media house blaming this on the drastic rise in the cost of imported raw materials, particularly newsprint, and the depreciation of the Kenya Shilling against the US Dollar.

The Group’s turnover dropped by 4.5 per cent 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.

The NMG pre-tax profit also dropped to Ksh10.8 Million at the end of June 2023 from Ksh354 Million in H1 2022 while the firm’s earnings per share was nil from Ksh1.3 per share in H1 2022.

NMG's total comprehensive income fell to Ksh190.5 Million from Ksh219.4 Million in H1 2022 while income attributable to owners of the firm fell to Ksh176.8 Million from Ksh218.8 Million during the period under review.

The Group’s performance during the first half of this year was, however, boosted by the growth of its digital footprint which saw a rise of 14 per cent to 59.5 million users compared to 52.2 million users last year.

The media house has been making drastic decisions to save its financial fortunes through efforts to reduce the population of its workforce in an effort to cut down its payroll and strengthen its position in the digital space, in a fresh mass-firing exercise that commenced following a staff meeting held at Nation Centre in the Nairobi Central Business District (CBD) on Tuesday, June 27.

It also revived its paywall feature on Nation's premium news articles, a feature viewed by NMG as an alternative to overreliance on advertising. 

Within its first year, it had netted Ksh5 million before it shelved the feature ahead of the 2022 general elections where Kenyans heavily consumed news content as they kept themselves up to speed with the polls.

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