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Scangroup net profit falls 4pc

BUSINESS NEWS
By Macharia Kamau | April 29th 2017

Growth in other African markets failed to shield communication firm WPP Scangroup from a harsh 2016 in Kenya that saw companies slash advertising budgets.

Traditional advertising also saw increased competition from alternatives such as digital media.

Scangroup yesterday reported a decline in after-tax profits, which went down 3.8 per cent to Sh460 million for the year to December 2016 compared to Sh478.6 million in 2015.

It is the second year in a row that the firm has reported a decline in profit and revenues. Its Sh478 million net profit in 2015 was a drop from Sh625 million the previous year, also attributed to a harsh business environment in Kenya.

Slow growth

In a statement, Scangroup said growth in other African markets where it has operations mitigated against poor performance in Kenya that had a major impact on its profits.

“The group faced a tough trading environment during 2016 in Kenya, its largest market. However, this was offset by good growth in markets outside of Kenya,” said the statement.

“As a consequence, the group’s revenue declined by 3.7 per cent and Kenya accounted for 60 per cent of the total. Performance of operations outside of Kenya was strong as we continue to develop newer markets.”

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Scangroup is also experiencing slow growth in revenues from its traditional mainstay of advertising and media business and reported that public relations and digital business posted the strongest growth.

Kenya’s contribution to the firm’s revenues has also been on a steady decline. Though the country remains the largest market for Scangroup, its 60 per cent share of the revenue last year was down from 66 per cent in 2015 and 70 per cent in 2014.

The company has operations in other African countries including Ghana, Nigeria, South Africa and Zambia where it said results were “particularly pleasing”.

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