Nation Media Group’s half year profit hits Sh1bn

Nation Media Group reported a 25.1 per cent growth in profit before tax in the first six months of the year.

The profit before tax rose to Sh1.1 billion at the end of June from Sh892 million the previous year buoyed by a 15.2 per cent rise in turnover to Sh5.1 billion from last year’s Sh4.5 billion.

Chief executive Linus Gitahi told an investor briefing at the Nairobi’s Norfolk hotel that all divisions of the group –newspapers, broadcasting, and digital — had improved revenue growth and performance putting it on a firm footing to beating last year’s results.

Shareholders will receive an interim dividend of Sh1.5 per share, the same as last year.

Mr Gitahi said the group was cautiously optimistic of a good performance in the second half despite the emergence of shocks in the operating environment.

“High levels of inflation and a weak shilling remain the major challenges,” he said pointing to the recent turbulence in the currency markets that saw the shilling drop to a low of Sh90 to the dollar last month from an average of Sh80 to the greenback a year ago.

Currency fluctuation is particularly important for the group which consumes tonnes of imported newsprint whose price is sensitive to the exchange rate.

Inflation rose for the eighth straight month in July to stand at 15.5 per cent driven by high cost of food and energy.

Besides raising production costs, the surge in inflationary pressure also poses the danger of eroding consumer purchasing power, eroding demand for goods and services, and ultimately slowing down advertising spend that is a key revenue stream for the media group.

Wilfred Kiboro, the chairman of NMG board also warned of the possible negative impact of intense political campaigns on the business environment.

“Politics could present a serious challenge to business in the run up to next year’s general election,” he said adding that Kenya’s economy has in the past grown steadily before slowing down in each election year. “It is important for the business community and the media in particular to fight negative campaigns and corruption aimed at funding elections,” he said.  

NMG, which is the market leader in Kenya’s newspaper market, said its mainstay Newspapers Division realised a 10 per cent and 21 per cent growth in advertising and circulation revenues respectively.

The Business Daily –the youngest publication — recorded an 881 per cent growth in operating profit as advertising and circulation revenue grew 11 per cent and 12 per cent respectively.

The company has launched an online platform that sells print and broadcast content to consumers around the world.

Mr Gitahi said NMG will continue to pursue investment opportunities in the region. He said the group had spent US dollars 2.1 million (Sh189 million) in a new printing press to improve the quality of its Uganda newspapers.