DStv owner MultiChoice expects profit surge

MultiChoice said in a trading statement on Thursday that it expects trading profit to reach nearly R5 billion for the six months ended September 2019, up 20% from the prior period.

The DStv Satellite Television service provider listed on the Johannesburg Stock Exchange (JSE) at the end of February, having been spun off from Naspers.

It said that compared to its interim results for 2018, the group expects core headline earnings per share to be between 20% (70 cents) and 25% (88 cents) higher than 352 cents per share.

Trading profit is expected to be between 20% (R800 million) and 25% (R1 billion) higher than the prior year’s R3.9 billion. On an organic basis (i.e. reflecting results on a constant currency basis, excluding any M&A) trading profit is expected to be between 30% (R1.2 billion) and 35% (R1.4 billion) higher than the prior year’s reported R3.9 billion, it said.

“The board considers core headline earnings per share and trading profit as the two most appropriate indicators of the operating performance of the group, as they adjust for non-recurring and non-operational items,” MultiChoice said.

“The improved financial performance expected for the current period is despite continued macro-economic headwinds faced across the continent, which are impacting disposable income at a consumer level.

“Management has remained focused on tight cost controls to offset these challenges and continued to reduce losses in the Rest of Africa segment, which has been the largest contributor to the improvement in group performance,” it said.

Compared to the prior year, MultiChoice said it expects earnings per share for the current period to be between 249 cents and 264 cents higher than the prior year’s earnings per share of 79 cents per share.

Headline earnings per share for the current period is expected to be between 256 cents and 271 cents higher than the prior year’s headline earnings per share of 78 cents per share, MultiChoice said.

The key reasons for the movements above are:

  • an improvement in trading performance as highlighted in the discussion of the growth in trading profit and core headline earnings per share above; and
  • the lower depreciation of the SA rand against the US dollar compared to the prior period which has led to a decrease in unrealised foreign exchange losses on translation of the group’s US dollar denominated transponder lease liabilities.

MultiChoice delivers local and international entertainment and sport content to around 14-million households in 50 African markets. It also includes the production of over 4,500 hours of local content in 10 studios across Africa.

Having opened trading at a price of R95 on the 27 February, share in MultiChoice reached R124.67 in afternoon trade on the JSE.


Read: MultiChoice lists on the JSE

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DStv owner MultiChoice expects profit surge