WPP ScanGroup PLC has yet again issued a profit warning for the financial year ending 31st December 2024, as the marketing and communications company struggles to make money in tough economic times.
It says earnings for 2024 will be significantly lower than Ksh130 million recorded for 2023. Notably, last year’s Ksh130 million profit was also a drop from Ksh145.5 million recorded in 2022, which came after a profit warning issued in November 2023.
In a statement filed at the Nairobi Securities Exchange (NSE) on 23rd November 2024, the Board of Directors of WPP Scangroup PLC informed shareholders, potential investors and the general public that based on the preliminary assessment of its projected consolidated financial results for the financial year ending 31st December 2024, net consolidated earnings for the company and its subsidiaries will be at least 25% lower than that reported in the financial year ended 31st December 2023.
“The financial results for the financial year 2024 are negatively impacted by foreign exchange losses driven by the significant appreciation of the Kenyan shilling versus the reported gains in 2023,” said a statement filed by WPP Scangroup PLC Company Secretary, Ms Winniefred Jumba. The latest profit warning signals more hard times ahead for Scangroup with the communications and advertising industry getting cut-throat in both Kenya and regional markets.
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Among the reasons Scangroup cited in the November 2023 profit warning was “continued subdued economic environment in our markets of operations that has led to cautious spending by our clients on advertising, marketing and communications.” It also reported spending Ksh178 million on a one-time staff retrenchment.
While issuing the profit warning last year, Scangroup CEO, Ms Patricia Ithau had given a positive prognosis on performance. “We have built a strong technology stack to support innovation-led growth for our agencies. The next stage of transforming our business is focused on continuing to invest in technology and talent, leveraging the gig economy and AI for agility and developing net-zero targets in line with our sustainability agenda,” said Ms Ithau.
That appears to have been wishful thinking with earnings trending even lower. Just this month, the company reportedly set in motion plans to lay off staff and restructure roles in some of its units, an indication that it is struggling financially.
According to recent reports, the company has issued notices to some of its staff to reapply for roles, and notified them that some roles will cease to exist. The notices were sent to employees in the creative units, but there are also reports that staff in the account management and shared services departments also received them.
In February 2024, UK media reported that WPP Scangroup could be facing a potentially expensive litigation from its founder and former CEO, Bharat Thakrar, who was ousted in 2021. Thakrar, who still owns 10% of the company, raised issues with his exit, which he claimed was discriminatory and designed to ruin his reputation. He is claiming damages amounting to Ksh4.3 billion.
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