MultiChoice sees profits plummet as economy takes toll

South Africa’s MultiChoice expects profits for its full financial year to be dramatically lower than last year’s numbers, with its organic trading profit likely to be 22-26% lower, and its organic trading profit excluding streamer Showmax expected to be down by as much as 40%.

The pay TV outfit said that its full-year performance (MultiChoice’s year-end is March 31) was “negatively impacted by an adverse and volatile economic environment” but that it had “responded with tactical interventions by focusing on cost optimisation and cash management, including reduced decoder subsidies, which continued to yield positive economic outcomes”.

Loss per share are expected to be between 13-17% worse than last year, while headline loss per share (which excludes any exceptional items) could be as much as 140% worse.

MultiChoice said the increased losses were due to increased investment in Showmax, and the depreciation of the Nigerian naira against the dollar as well as the overall macroeconomic situation.

Expected loss per share has also been impacted by a ZAR1 billion (US$53 million) impairment charge related to IT systems due to a reassement of business needs “in the context of an extremely challenging operating environment”.

The company said that group trading profit on an organic basis (at constant currency and excluding mergers and acquisitions) would improve year-on-share despite an additional ZAR1.4 billion in Showmax trading losses. This is due to inflation-led price hikes across different markets as well as cost-cutting. However reported trading profit will go down because the group has been forced to absorb a negative ZAR4.5 billion foreign exchange impact.

MultiChoice will publish consolidated financial results on June 12.

Earlier this week France’s Canal+ Group opened its offer to acquire all MultiChoice shares it does not already own for ZAR125 a share.