Nation Media Group (NMG) posted a 30.9 per cent growth in profit before tax last year, helped by revenue growth and marketshare gains, earning shareholders a dividend of eight shillings per share. FILE
Nation Media Group (NMG) posted a 30.9 per cent growth in profit before tax last year, helped by revenue growth and marketshare gains, earning shareholders a dividend of eight shillings per share.
Revenues from radio, television, digital, and newspaper divisions rose by 17.1 per cent to Sh11.2 billion, lifting profits to Sh2.8 billion compared to Sh2.1 billion in 2010.
The board has proposed an increase in the ordinary dividend from Sh5.50 per share to Sh8 per share.
Group chairman, Wilfred Kiboro, said NMG would spend more on regional expansion to boost growth of the business.
“Our strategy of investing in the region is paying off and we will continue to invest in the neighbouring countries where there are a lot of opportunities,” said Mr Kiboro.
“We are now less reliant on the Kenyan market for our profitability,” he added.
The region’s biggest media house opened a radio station, 98.7 KFM in Rwanda last month, marking its first venture in the country where its shares trade on the over-the-counter (OTC) market.
The company is also set to open a bureau in the newly independent Republic of South Sudan to tap into opportunities in the country seen to have a high potential for growth due to its vast oil reserves. NMG’s plans to set up a television station in Tanzania have, however, been delayed but the search continues.
“We are looking at a greenfield option (starting from scratch) and that will depend on how soon we can secure a licence,” he said.
NMG’s chief executive, Linus Gitahi, said the media group was also set to tap into the multi-billion- shilling diaspora remittances market.
The company was preparing to unveil a money transfer service called NationHela, to be rolled out in partnership with Diamond Trust Bank (DTB).
The newspaper division, which recorded a 19 per cent growth in circulation earnings and 10 per cent increase in advertising income, remains NMG’s biggest revenue stream.
The Business Daily, the group’s youngest publication, recorded a 14 per cent and 17 per cent growth in circulation and advertising revenue respectively, helping it to post a 69 per cent rise in operating profit.
Advertising revenue from its two Kenyan radio brands, QFM and Easy FM, rose 16 per cent over 2010. The dramatic weakening of the shilling last year pushed up the company’s expenses by inflating costs of newsprint — one of the single biggest cost items for publishers.
The NMG share traded at an average of Sh165 Wednesday, riding on increased demand from foreign investors in the past two weeks. “The company’s performance matched our expectation and was good given the high cost environment. There is a lot of demand for the company’s shares from foreign investors,” said Renaldo D’ Souza, an analyst at Genghis Capital.
NMG weathered a challenging business environment –including a weak shilling and high inflationary pressure—to post growth.
The cost of goods sold (COGS) rose 39.1 per cent to Sh2.9 billion from Sh2 billion, with the shilling having weakened from Sh82 against the dollar in January to a record low of Sh107 in mid October.
Operating expenses, however, rose by a marginal 5.6 per cent to Sh5.8 billion on what Mr Gitahi attributed to prudent management of costs. Mr Kiboro said the high inflationary pressure and the looming General Election remain the major risks in 2012.
Inflation rose from 5.4 per cent in January last year to peak at 19.7 per cent in November and eased marginally to 16.7 per cent last month.
High inflationary pressure erodes consumers’ purchasing power, cutting down demand for goods and services, and ultimately slowing down advertising spend, which is a key revenue stream for the media group.
Analysts at Kestrel Capital see political advertising this year and the entry of more multinationals as providing fresh advertising growth opportunities to the company.
“The arrival of multinationals such as General Electric, Microsoft, and Ericsson in Nairobi to set up sub-Saharan Africa subsidiaries should add impetus to growth of advertising revenue as these companies seek brand visibility in the market,” said Joy Migongo, an analyst at Kestrel Capital.
“We also expect revenue growth in the run up to the general election mainly driven by political advertising and increased circulation that comes with a rise in consumption of news during the election period,” she said.
NMG trades in Tanzania through its subsidiary, Mwananchi Communications Ltd, the publisher of Mwananchi, Mwanaspoti and The Citizen newspapers.
In Kenya, the group publishes the Daily Nation, The EastAfrican, Taifa Leo, and the Business Daily newspapers and runs two radio stations, Easy FM and QFM and two TV stations, NTV and e-Africa.
In Uganda, the company operates a television station, NTV Uganda, while its subsidiary, Monitor Publications, publishes The Monitor and the Monitor Telephone Directory and operates radio station KFM.
