Nation Media Group #ticker:NMG has maintained a total dividend payout at Sh10 per share despite full-year net earnings dropping by a fifth, highlighting the firm’s bullish outlook for this year.
The Nairobi bourse-listed media house reported Sh1.68 billion in after-tax profit for the fiscal period to December 2016 compared with Sh2.22 billion a year earlier — an outcome it attributed to one-off costs related to restructuring and absence of a tax credit enjoyed in 2015.
NMG, the largest media company in Eastern Africa, posted Sh11.3 billion in turnover from Sh12.3 billion in 2015, helped by increased sales from the digital and television divisions.
“The underlying business is fairly strong. We’ve reduced our cost base. Those costs won’t be recurring this year,” Joe Muganda, the NMG chief executive, said at an investor briefing.
“We are acquiring and creating new revenue streams. We continue recouping the benefits of the new printing press.”
He said the company had weathered a tough operating environment with challenges such as reduced advertising spend from key clients and delayed payment especially by State agencies.
The total dividend payout due to shareholders amounts to Sh1.88 billion reflecting a dividend yield of 10.53 per cent based on yesterday’s closing price of Sh95 per share; the third-best return at the Nairobi bourse.
NMG closed the year with a cash war chest amounting to Sh3.4 billion, up from Sh3 billion in 2015.
The group incurred one-off costs totalling Sh342.9 million related to the radio business, QTV, staff retrenchment, and setting up Spark TV station in Uganda.
The company’s 2015 results benefited from a Sh274 million tax credit related to the capital investment in setting up the $20 million state-of-the-art printing press launched in mid-March last year.
Cost of sales dipped by a fifth to Sh2 billion from Sh2.4 billion in 2015, attributed to the efficiency of the new printing press, reworking route to market, and proper management of newspaper returns.
Mr Muganda said revenue from the digital business doubled to account for three per cent of total revenue, and plans are underway to grow this to 10 per cent in the short term.