Nation Media Group (NMG) shareholders are set to receive an interim dividend of $0.014 per share for the first half of 2019, despite an 8.4 per cent drop in the company’s total comprehensive income, with the board projecting a stronger performance in the second half of the year.
NMG board Chairman Wilfred Kiboro announced the dividend payout Wednesday at an investor briefing in Nairobi, where the largest media house in East and Central Africa announced that it had earned $5.8 million profit before tax.
Group turnover dropped 7 per cent to $45 million from $48 million achieved in the first half of last year.
The decline in profitability was mainly attributed to the challenging business environment that saw many companies cut their advertising budgets in a period punctuated by losses, profit warnings and staff layoffs.
“We have maintained our interim dividend because of the level of confidence we have that the performance will improve in the second half of the year,” said Mr Kiboro, adding that the Group is deepening its investments in digital products to boost future returns for shareholders.
The chairman told shareholders that NMG has $67 million retained earnings, which the board will soon deliberate on the possibility of issuing bonus shares or paying a special dividend.
Richard Tobiko, the Group Finance Director, told investors the performance mirrors the rising number of Kenyan companies facing financial distress in the market.
“A lot of organisations are struggling and they are ideally our advertisers. A lot of time when firms struggle, they cut sales promotions and advertising budgets,” said Mr Tobiko.
Direct costs went up from $8.5 million to $9.7 million mainly driven by higher prices of newsprint in the global market. Operating costs, however, dropped by 8.5 per cent to $30 million attributed to improved productivity and efficiency.
Mr Tobiko said most of the newsprint in use during the first half were procured last year when global prices were high owing to a supply shortage. Prices have since subsided.
During the six-month period, total cash grew by 29 per cent to $28 million as a result of increased collections particularly from Government Advertising Agency (GAA) which paid $5.8 million of the debt that was outstanding at the end of last year.
“This has given us a chance to resume doing business with GAA but under fairly strict conditions to ensure we don’t grow this debt again,” he said.
Group Chief Executive Officer Stephen Gitagama said as NMG marks 60 years, the next phase will be about strengthening delivery on impactful journalism while serving content in formats that resonate with the fast-evolving needs of different audiences.
NMG is focusing on monetising its digital assets as the next frontier for new revenue streams.
“We have invested significantly in understanding our audiences. We have brought on board data scientists, data analysts and data engineers to track user behaviours as we move towards monetising content,” said Mr Gitagama.
Group Editorial Director Mutuma Mathiu said NMG has now assessed its ability to create desirable content, researched on audience needs and their ability to pay for digital content. It has also tested various payment models, thereby “eliminating guesswork”.
The group has set aside adequate financial resources for new innovations, especially on digital products in the current financial year.
Consumers using NMG digital products have continued to soar, with the active users hitting 39.2 million in July. E-paper subscriptions registered a growth of 67 per cent in the past 12 months.