DStv owner MultiChoice struggling

MultiChoice released a trading statement today, revealing that it expects a big reduction in its earnings per share for the six months ended 30 September 2022.

Earnings per share for the current period will be between R3.71 and R3.87 lower than the prior period’s reported earnings per share of R3.17.

Headline earnings per share are expected to be between R4.06 and R4.20 lower than the prior period’s headline earnings per share of R3.56.

What it means, in simple terms, is that MultiChoice expects to make a net loss for the reporting period.

MultiChoice said the reduction in earnings and headline earnings per share is primarily due to higher unrealised foreign exchange losses.

It is a result of the translation of the group’s USD liabilities, including transponder leases, stemming from the sharp depreciation in the rand against the US Dollar.

Earnings were further impacted by increased foreign exchange losses associated with the repatriation of cash from Nigeria.

Trading profit and core headline earnings per share

MultiChoice said it considers trading profit and core headline earnings per share as the most appropriate indicators of the group’s operating performance.

Trading profit is expected to be between 0% and 5% (R0.3 billion), higher than the R6.0 billion reported for the prior period.

On an organic basis, trading profit is expected to be between 2% (R0.1 billion) and 7% (R0.4 billion), higher than the prior period’s reported R6.0 billion.

Core headline earnings per share for the current period are expected to be between 1% and 5% higher than the prior period. It includes the impact of realised foreign exchange gains and losses.

Further details will be provided in the condensed consolidated interim financial results, due to be released on 10 November 2022.

Share price decline

The MultiChoice share price declined on the trading update, dropping from R120.35 to R118.10.