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Loss-Making Standard Group Hints At More Staff Layoffs To Stay Afloat

Kenya's second biggest media company cuts losses to Ksh102 million, but road to recovery is getting tougher

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Standard Group, which runs Kenya’s second biggest newspaper, continued to swim in red ink after recording another loss for the half-year ended 30th June 2023. According to the Standard Group results filed at the Nairobi Securities Exchange, the media house made a net loss of Ksh102.9 million, a significant improvement from a net loss of Ksh300 million in the same period in 2022, and hinted at more cost-cutting measures including staff rationalization.

The group’s net loss was reduced also by a tax credit of Ksh44 million after it had booked a loss before tax of Ksh147 million compared to a loss before tax of Ksh429 million in the prior year. This offers hope for a return to profitability in the medium-term, after recording a Ksh1 billion loss for the full-year 2022, though this will not be easy given the shifting trends in media. In 2021 it had a loss of Ksh22 million.

The company’s total revenue for the half-year period to June 2023 decreased by 8% to close at Ksh1.26 billion from Ksh1.37 billion in the previous six-month period, a situation attributed to reduced advertising spending as businesses cut back on expenditure to weather the current economic conditions.

In response, the Group says it has undertaken cost rationalization measures on operating expenditure, key amongst them being staff costs. This saw total costs decrease by 22% compared to a similar period in 2022.

There is renewed confidence in the resumption of profitability as the new recovery team, led by acting CEO Joe Munene, works to grow revenues and reduce operational costs.

The board of directors, through Company Secretary Millicent Ng’etich, says the business environment during the period was constrained, against a backdrop of growing global uncertainties, drought, sustained geopolitical tensions, and tightening monetary policies in advanced economies. “The cost of business was on an upward trend with inflation averaging 8.5% during the 6-month period against 6.2% during a similar period last year, pushed by food and fuel prices,” the board says.

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The media house, which also runs KTN TV station as well as Radio Maisha, among other media outlets, has been under pressure over the past three or so years, as revenues got squeezed. It has lately been experiencing problems paying staff, holding up to three months in salary arrears. A good number of staff, worried about this uncertainty, have been bolting out.

Future Outlook

The Group is confident that the current market conditions will continue to improve as the Government undertakes policy changes aimed at strengthening the economy.

“The Group is undertaking a transformation process to competitively position itself to meet the changing needs of its clients through innovation across our wide range of media products,” it says. “Further, the Group has cushioned itself through continued cost rationalization in a bid to minimise wastage and operate much more efficiently.”

Additionally, Standard Group is banking on its digital-first approach, the launch of a new look KTN Home, and the revamp of radio and digital products to improve its fortunes.

Next >> Inside Alfred Mutua’s Multi-Million Business Empire

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BT Reporter
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editor [at] businesstoday.co.ke
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