Kenya's leading media conglomerate, Nation Media Group, has issued a cautionary statement, revealing a significant profit decline of at least 25 per cent.
This warning comes as a result of several challenging factors within the business environment influenced by multiple economic factors, including a surge in fuel prices, depreciation of the Kenyan Shilling, rising interest rates, and higher taxes.
The company's Company Secretary, Angela Namwakira, highlighted the compounding issues affecting their financial performance.
"In addition, the increase in global prices of newsprint coupled with a weakened Kenya Shilling against the dollar and higher distribution costs arising from fuel prices have resulted in significant incremental direct costs compared to previous year," Namwakira stated.
The board of Nation Media Group has expressed its confidence in recent investments aimed at accelerating product innovation, diversifying revenue streams, and transforming the organization into a more agile, customer-centric, and data-driven entity.
These strategic measures are intended to deliver long-term shareholder value.
The fiscal report, ending on June 30, 2023, revealed a stark decline in net earnings, plummeting to Sh2.9 million compared to a net profit of Sh247.8 million during the same period in 2022.
The primary culprits behind this decline were identified as the substantial rise in the cost of imported raw materials, particularly newsprint, and the depreciation of the Kenyan Shilling against the US Dollar.
Despite these challenging circumstances, the board of directors remains optimistic.
The company plans to leverage recent investments to drive product innovation, diversify revenue streams, and transform the organization into an agile, customer-centric, and data-driven entity aimed at delivering long-term shareholder value.
Although the Group faced a significant decline in profit, there was a notable silver lining. The performance during the first half of this year saw a 14 per cent increase in the digital footprint, reaching 59.5 million users compared to 52.2 million users in the previous year.
This growth in the digital sphere could potentially offset some of the losses incurred by the traditional media sector.
This suggests that the media company's digital strategies may have proven successful, even in the face of broader economic adversities.
The cautionary statement stands as a testament to the challenges faced by the media conglomerate in the midst of economic upheaval.
The Nation Media Group is now tasked with navigating a complex landscape, relying on strategic investments and digital expansion to mitigate the impact of adverse economic conditions.
As Nation Media Group grapples with the multifaceted challenges affecting its financial health, the company remains optimistic about its prospects, banking on its ongoing efforts to adapt to the changing media landscape and secure long-term success for its shareholders.