Nation Media Group (NMG), a prominent media conglomerate in East Africa, has revealed a significant decrease in its net earnings for the first half of the year, ending on June 30, 2023.

The company's net profit plummeted to Sh2.9 million, a stark contrast to the Sh247.8 million reported during the same period in 2022, leaving stakeholders and industry experts to assess the factors contributing to this unprecedented decline.

The Nation Media Board has pointed to two key factors driving this downward trend: the substantial increase in the cost of imported raw materials, particularly newsprint, and the depreciation of the Kenyan Shilling against the US Dollar.

These factors, in combination, resulted in a staggering incremental direct cost of Sh179 million for the company.

Despite this adverse impact, the Nation Media Group managed to offset some of the losses by implementing measures that reduced operating costs through enhanced operational efficiency and increased productivity.

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Moreover, the Nation Board has indicated that several external economic challenges have also weighed down on the group's financial performance.

Weak consumer spending, a surge in the prices of essential commodities, elevated fuel prices, and rising interest rates have all contributed to the company's lacklustre financials, causing a ripple effect on its overall performance.

The group's turnover recorded a 4.5 per cent decline, settling at Sh3.5 billion in June 2023 compared to Sh3.7 billion during the same month the previous year.

Concurrently, the gross profit experienced a decline, dropping from Sh3 billion to Sh2.7 billion over the corresponding period.

In terms of pre-tax profit, NMG's figures have witnessed a dramatic slide from Sh354 million in H1 2022 to a mere Sh10.8 million by the end of June 2023.

Additionally, the company's earnings per share plummeted from Sh1.3 per share in H1 2022 to nil in the current period.

These stark disparities could provide insight into NMG's decision to initiate a second share buyback program, aiming to bolster equity prices and reward shareholders amidst these challenging times.

When analyzing comprehensive income, NMG's numbers painted a similarly grim picture. 

The total comprehensive income dropped from Sh219.4 million in H1 2022 to Sh190.5 million in the first half of 2023.

The income attributable to the owners of the company also suffered, falling from Sh218.8 million to Sh176.8 million during the period under review.

Despite these challenges, there have been rays of hope for Nation Media Group's performance in the first half of this year.

A remarkable 14 per cent growth was observed in the company's digital footprint, with the number of users increasing from 52.2 million in the previous year to 59.5 million in 2023.

The group attributes this growth to a dedication to innovation and the creation of products tailored to resonate with audiences, adopting an experiment-driven approach to speed up the monetization of its expansive digital reach.

Furthermore, the company's niche products, including Business Daily, The East African, and Taifa Leo, have demonstrated growth owing to insightful content and successful partnership initiatives.

Similar strategies are being rolled out across the group's various products.

In light of the current economic landscape and the group's investment plans, the Board of Directors has decided against recommending the payment of an interim dividend.