Scangroup issues profit warning on loss of Airtel business
WPP Scangroup incurred a one-off cost of Sh160 million to part with staff affected by a restructuring triggered by need to protect its bottom-line.
What you need to know:
- The company incurred a one-off cost of Sh160 million to part with staff affected by a restructuring triggered by need to protect its bottom-line.
- The profit warning signals that the cost-cutting and reduced foreign exchange pressures were not sufficient to cover for the revenue reduction.
Listed marketing services firm WPP Scangroup has issued a profit warning for its full year ending December 2025, citing loss of a material client and one-off staff restructuring cost.
The cautionary statement means the company will post a larger net loss of at least Sh633.4 million for the period, up from a net loss of Sh506.7 million it recorded in the year to December 2024.
WPP Scangroup had in May disclosed it had parted ways with Airtel Africa, a client that accounted for nearly a fifth of the firm’s annual sales that stood at Sh2.4 billion last year.
The company incurred a one-off cost of Sh160 million to part with staff affected by a restructuring triggered by need to protect its bottom-line.
“The Board of Directors of WPP Scangroup Plc wishes to inform the shareholders of the company, potential investors and the general public that based on the preliminary assessment of its projected consolidated financial results for the financial year ending 31 December 2025, net consolidated earnings for the company and its subsidiaries... will be at least 25 percent lower than that reported in the financial year ended 31 December 2024,” the firm said in a public notice.
“The lower than expected earnings in 2025 are due to several reasons, including decline in revenue attributed to reductions in client spends, the loss of a material client and lower interest income."
WPP Scangroup had reported an improved loss position of Sh208.3 million in the first half of the year to June 2025 compared to a loss of Sh252.3 million over the same period last year. The firm rode on cost cutting and a stable shilling to absorb a 16 percent drop in gross profit attributed to the reduced client spends in marketing and advertising.
A stable shilling saw forex losses booked by the company decline to Sh6.4 million from Sh250.9 million a year earlier.
The profit warning by WPP Scangroup signals that the cost-cutting and reduced foreign exchange pressures were not sufficient to cover for the revenue reduction owing to lower client spend and loss of Airtel Africa business.
The company's last full year net profit was in 2023 when it posted earnings of Sh130.1 million.
