Why IHS Holding Shares Are Slipping Today

IHS Holding Ltd IHS shares are trading lower by around 5% after the company disclosed mixed Q2 FY23 results and lowered FY23 guidance.

The company reported a revenue increase of 16.8% Y/Y to $546.2 million, beating the consensus of $522.18 million.

Organic growth was 29.7%, driven primarily by escalations, power indexation, foreign exchange resets, and Lease Amendments.

EPS loss of $(3.73) missed the consensus of $0.18 in the quarter. 

Adjusted EBITDA rose 27.0% Y/Y to $303.7 million, with a margin expansion to 55.6% from 51.1% a year ago.

Operating cash flow stood at $264.1 million, and capital expenditure was $207.0 million in the quarter.

Repurchase: The company's board of directors authorized a share repurchase program for up to $50 million, effective August 15, 2023, through August 15, 2025.

Sam Darwish, Chairman, and CEO, said, "And we are encouraged by the recent policy changes implemented in Nigeria that are intended to put the country on a better economic path. In the near-term, however, these changes will cause some anticipated friction including the significant devaluation of the Nigerian Naira that occurred in mid-June."

"Subsequently, we are revising our 2023 guidance for revenue, Adjusted EBITDA and RLFCF while maintaining our capex guidance and our target leverage ratio. Our expectation for revenue would have otherwise increased by $31 million had the average FX rates previously assumed in our guidance remained unchanged, reflecting the strength we continue to see in our fundamental business." 

FY23 Guidance: IHS lowered sales outlook to $2.08 billion-$2.11 billion from $2.19 billion-$2.22 billion vs. consensus of $2.09 billion and adjusted EBITDA to $1.13 billion -$1.15 billion from $1.2 billion-$1.22 billion earlier.

The outlook reflects a foreign exchange headwind of $141 million.

Price Action: IHS shares are trading down by 4.79% at $7.55 premarket on the last check Tuesday.