The Nation Media Group (NMG) has issued a public cautionary statement warning shareholders, investors and the public amid a harsh economic season that has hit the company’s fortunes.
“The Board of Directors of Nation Media Group PLC (“the Company”) has deemed it necessary to make this announcement to the shareholders, investors, and general public, pursuant to the provisions of the Fifth Schedule of the Capital Markets (Securities) (Public Offers. Listing & Disclosures) Regulations, 2002,” the cautionary statement, signed by NMG company secretary, Angela Namwakira stated.
According to the Fifth Schedule of the Capital Markets (Securities) (Public Offers. Listing & Disclosures) Regulations, 2002, companies are required to disclose information that includes major developments that may lead to a significant movement in share prices.
Further, the act implies that the information should be disclosed as soon as possible to interested parties.
Nation Media Group blames market forces for increased production costs
The notice went ahead to state that like most sectors of the economy, media business in Kenya, has been adversely impacted by outside forces such as the increases in prices of basic commodities, 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 cost of doing business,” the statement cited.
Additionally, NMG, which is listed on the Nairobi Securities Exchange, cited the increase in global prices of newsprint coupled with a weakened Kenya Shilling against the US Dollar.
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Further, higher distribution costs arising from fuel prices were also noted to have contributed to the rising cost of production of print newspaper compared to 2022.
However, NMG stated that passing on these costs of production to the consumer by hiking the prices of print newspaper was not sustainable eventually.
On this, NMG noted how they had been dealing with the issue.
“The costs were however partially mitigated by cost containment initiatives and improved productivity,” the statement cited.
More woes for NMG as profits decline
At the end of the half year period ended 30th June 2023, NMG posted a significant decline in net earnings to Ksh 2.9 million.
This was in comparison to net profit of KSh 247.8 million that was the media house posted by end of the first half year of 2022.
Notably, the Nation Media Board attributed the decline in profitability to the drastic rise in the cost of imported raw materials, particularly newsprint, and the depreciation of the Kenya Shilling against the US Dollar.
The resultant increase in costs of productivity of Ksh 179 million was absorbed by the NMG.
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Consequently, this adverse impact was partially mitigated by reduced operating costs resulting from improved operational efficiency and increased productivity.
“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 percent,” the latest cautionary announcement by NMG stated.
However, the Board of directors noted that the investments made to accelerate product innovation, diversify revenue streams, and transform the organization into an agile, customer- centric and data-driven media company will deliver long-term shareholder value.
