MTN warns of massive earnings hit

MTN has warned shareholders to expect substantially lower earnings due to the sharp devaluation of the Nigerian naira against the U.S. dollar.

Although MTN said its underlying operational performance was “resilient” in a “challenging operating environment”, foreign exchange losses dragged on its financial results.

The weaker naira drove higher operating and net finance costs for MTN Nigeria, which are expected to impact the company’s 2023 full-year results.

“The foreign exchange losses in MTN Nigeria’s financials are estimated to be 593 cents (2022: 52 cents) in the Group FY 23 results,” MTN stated.

MTN said it expected to report decreased earnings in the ranges as tabulated below.

2022 Expected decrease 2023
Earnings per share R10.71 70% – 90% R1.07 to R3.21
Headline earnings per share R11.54 60% – 80% R2.31 to R4.62

MTN said its earnings per share (EPS) for 2023 includes:

  • Impairment losses that mainly relate to investments, goodwill, property, plant and equipment and remeasurement of non-current assets held for sale of approximately 40 cents.
  • An impairment loss on remeasurement of disposal groups of 50 cents.
  • A net gain on the disposal of SA towers of 3 cents (2022: 22 cents).
  • Net loss on disposal of property, plant and equipment, and intangible assets of -1 cents (2022: 9 cents).

Headline earnings per share were also negatively impacted by some non-operational items, MTN said. These include:

  • Hyperinflation adjustments of 151 cents (2022: 125 cents)
  • Foreign exchange losses of 715 cents (2022: 181 cents), which includes naira depreciation impact of 593 cents (2022: 52 cents)
  • Remeasurement of deferred tax asset of nil (2022: 65 cents)
  • Other non-operational items of 23 cents (2022: 14 cents)

Despite the headwinds, MTN’s board said it expects to declare a minimum dividend of R3.30 per share.

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MTN warns of massive earnings hit