DStv parent MultiChoice in big trouble
DStv parent company MultiChoice has warned shareholders about a massive decline in profit ahead of the publication of its annual results for the 2022/2023 (FY23) financial year.
The broadcaster is currently finalising its results and told shareholders it expected to report substantial drops in earnings and headline earnings per share.
“Compared to FY22, the Group expects earnings per share for FY23 to be between R11.26 and R11.42 lower than the FY22 reported earnings per share of R3.18,” MultiChoice stated.
That would work out to a loss of between R8.08 and R8.24 per share, amounting to a total loss exceeding R3.58 billion when accounting for all of MultiChoice’s issued shares.
Headline earnings per share are expected to decline by R6.71 and R6.90 ZAR from the FY22 reported headline earnings per share of R3.81.
That equates to a headline loss per share between R2.90 and R3.09. Overall headline losses would therefore amount to between R1.28 billion and R1.37 billion.
MultiChoice blamed the reductions on two main factors:
- Higher unrealised foreign exchange losses on the translation of the Group’s USD liabilities (including transponder leases) stemming from the sharp depreciation of the Rand against the US dollar
- An increase in foreign exchange losses associated with the repatriation of cash from Nigeria at the parallel
MultiChoice said it recorded strong subscriber growth, while its Rest of Africa business returned to profitability and its cost savings targets were exceeded.
However, its performance was dragged down by a “challenging” South African environment, increased decoder subsidy investment, and marketing for the 2022 Fifa World Cup.
Furthermore, earnings per share were also impacted by the impairment of the KingMakers Group, driven by increased discount rates in the broader gaming technology sector.
The MultiChoice board insisted that it regards trading profit and core headlines per share as the two most important performance indicators for the group, as these adjusted for non-recurring and non-operation items.
The company expects trading profit to be 0% to 5% lower than the previous year. That would work out to a drop of R500 million over the 2021/2022 year’s R10.3 billion in trading profit.
The company said the reduction accounted for costs associated with the Comcast partnership announced in early March 2023.
MultiChoice will report its FY23 annual results on Wednesday, 14 June 2023.
The markets have already reacted to the expected earnings decline, with MultiChoice’s shares plummeting, as shown in the graph below from Daily Investor.
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