Massive loss for Multichoice

DStv owner Multichoice has warned shareholders that it expects to report a massive loss in the first half of the year, estimated at a loss of R1.84 billion.

Multichoice said it is experiencing “the most challenging operating environment in the group’s history”, and has also entered the peak investment cycle of Showmax.

Thus it expects losses and headline losses per share to increase due to the early life cycle of the Showmax business.

The group expects reported trading profit to decline year-on-year and be close to flat on an organic basis.

The group said its 1H FY25 financial performance had been negatively impacted by severe pressure in the macro-economic, foreign exchange rate and consumer environment in key markets, most notably Nigeria and Zambia.

The group expects to report a further R2.1 billion in foreign exchange rate movements through its income statement on non-quasi equity inter-group loans in the current period.

It said it is pursuing an “inflationary pricing strategy” and targeting R2.0 billion in cost savings in the group’s full-year results ending 31 March 2025 to offset weaker subscriber activity and foreign exchange pressures.

Looking past the losses, it said the pricing strategy would deliver an “organic” growth in trading profit of 30%.

“Adjusted core headline earnings per share” for the year is expected to decline year-on-year to close to breakeven.

The group prefers trading profit and adjusted core headline earnings per share to be used as indicators of operating performance as they adjust for non-recurring and non-operational items.

Organic trading profit and adjusted core headline earnings per share are considered to be non-IFRS measures.

Organic trading profit is calculated by excluding foreign currency movements and changes in the composition of the group.

Adjusted core headline earnings is calculated by adjusting headline earnings for the following items, net of tax and non-controlling interests.

Daily Investor analyst Drikus Greyling calculated MultiChoice’s expected loss for the interim period.

At the high end, MultiChoice is expected to make an interim loss of R1.84 billion. At the lower end, the company is expected to make an interim loss of R1.89 billion.

It is important to note that this excludes the company’s foreign exchange losses for the period, which are estimated to be over R2 billion.

This can potentially put the group’s total comprehensive loss at over R4 billion for the interim period.

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