NAIROBI, KENYA, AUGUST 22 — Nation Media Group half-year net profit dropped 35.4 per cent to Ksh529.2 million from Ksh819.8 million in a similar period last year, weighed down by revenues owed by the government and a drop in advertising proceeds.
The largest media house in East Africa recorded a 7.5 per cent drop in its turnover which closed the six months at Ksh4.9 billion, down from Ksh5.3 billion.
It rival-Standard Group however saw its profit more than triple to Ksh126 million from Ksh34.3 million it recorded the half-year 2017.
This is despite its revenues remaining flat at Ksh2.39 billion compared to Ksh2.41 billion last year.
NMG has blamed the drop to revenue shortfall as a result of reduced advertising and circulation volumes, the closure of NTV at the beginning of the year, the increase in global newsprint prices and foreign exchange depreciation, particularly in Uganda.
The government owes the media house US$8.5 million (Ksh856 million) in unpaid advertising revenue through the Government Advertising Agency (GAA) with about 85 per cent of the debt being overdue.
“Group turnover at Ksh4.9 billion was 6.7 per cent below last year, while the profit before tax was exceptional item (provision for overdue debt Ksh291.6 million and foreign currency exchange loss Ksh49.7 million) at Ksh1.1 billion was 7.4 below last year,” the Group reported in its financial statement.
The Group had to contemplate with the closure of its TV station-NTV early this year, when the government shut down three leading television stations in the country over political issues around the swearing in of then opposition leader Raila Odinga.
NMG is however optimistic of a good performance going forward, counting on its investment in digital media among other revenue streams. The board has declared an interim dividend of Ksh1.50.
“The Group has intensified the focus on new revenue sources, in addition to managing the costs to ensure sustained positive performance in the long term,” it said.
Meanwhile, Standard Group has pegged its profit rise to efficiency and cost optimization.
“ Direct cost, returned a saving of eight per cent mainly driven by better engagement with our suppliers on pricing and high quality production with minimal wastage. The continuous focus on implementation of the documented business policies and procedures has seen the Group record an eight per cent overheads savings due to increased efficiency,” the Group said.
Standard is also owed by the government.
“The Board of Directors and Management are confident that with the continued stability in the business environment and the initiatives already in place, the Group will continue to post a positive result,” the Group said in its financial statement.
NMG and Standard Group are the only listed media houses in Kenya. The industry has been hard hit by government debt which has hit Ksh3 billion.
Director of Public Prosecutions (DPP) Noordin Haji on August 9 ordered a probe into why the cash owed through GAA has not been paid to the industry.