Nation Media Group (NMG) has issued a profit warning expecting a more than 25 percent decline in full-year profits for the year ending December 2023 due to a tough business environment.
In a notice on Wednesday, NMG warned its shareholders, investors, and the general public that it would record depressed earnings, marking the second such warning in a decade.
According to NMG, tough economic times in the country are to blame for the expected drop in profits.
“Like most sectors of the economy, media business, particularly in Kenya, has been 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,” read the statement.
“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.”
The company noted that these factors have reduced the spending power of consumers while increasing the cost of doing business.
Last year, NMG recorded a profit of Kshs 318.5 million after tax down from Kshs 493.1 million in 2021.
This means the decline will extend to the third year in a row which could see the largest media outlet in the region fall further as advertising revenue and print sales shrink. In the half year to June, the company recorded Kshs 2.9 million profits after tax.
The media behemoth in the past decade has been cutting its payroll to reign on costs amid declining newspaper sales and depressed ad revenues that have hit even Standard Media Group.
NMG in the notice stated that it would be difficult to offset the increased cost of operations “by passing them to consumers through a price increase.”
However, the media house noted that cost-containment measures are being implemented to mitigate the hemorrhage.
“... the Board remains confident that the investments we have 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,” the notice continued.
Early this year, NMG sent packing journalists to trim its wage bill, just months after a similar exercise in the last quarter of 2022.