WPP Scangroup has posted a net loss of Sh506.7 million for the year ended December 2024, reversing a Sh130.1 million profit recorded a year earlier, as foreign exchange losses and a steep drop in revenue upended the firm’s financial footing.
According to the Nairobi-based marketing and communications company, the downturn was largely driven by a Sh248.7 million foreign exchange loss – a dramatic swing from the Sh288.4 million gain it reported in 2023 – as well as a reduction in business following the departure of two major clients and its exit from several African markets.
“We had an unrealised forex hit of a quarter of a billion shillings that had a huge impact on the loss that we are currently declaring,” said WPP Scangroup Chief Executive Patricia Ithau.
The foreign exchange loss was attributed to the rebound of the Kenyan shilling, which appreciated sharply from 160 to 129 units against the US dollar last year, eroding the value of dollar-denominated holdings across Scangroup’s network of 39 countries.
The firm’s total revenue slid to Sh2.4 billion from Sh3.1 billion, reflecting weaker client activity and a difficult operating environment marked by widespread cuts in advertising budgets, particularly in mainstream media.
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“We also had to take some more prudent and conservative view on recoverable taxes that had further impact on the bottom-line numbers, and there were two significant creative businesses that we lost, which had an impact on our top line,” Ithau added.
Scangroup’s management pointed to mid-year political unrest as another setback. Anti-tax demonstrations held between June and August 2024 are said to have rattled corporate confidence, with advertisers pulling back on spending and waiting out the uncertainty.
“The financial year was marked by a significant decline in mainstream media advertising spend in Kenya, mirroring a broader global shift toward digital platforms,” the company said in its statement.
But even the ongoing pivot to digital advertising has not plugged the revenue hole.
“Even though digital spend has grown it is still not yet in this market able to close some of the gaps in terms of the drop that we’ve seen in traditional media. That trend is expected to continue,” said Ithau.
Shareholders will again go without a dividend – the fourth consecutive year without a payout – as the firm concentrates on stabilising its operations and investing in growth-focused technologies.
The year’s turbulence prompted internal restructuring, including a workforce reduction that saw 102 jobs cut, and divestiture from two subsidiaries in Nigeria and South Africa.
These measures helped reduce operating and administrative expenses to Sh2.45 billion from Sh2.68 billion, offering some buffer against the fall in earnings.
While acknowledging the toll of declining revenues, Ithau expressed optimism about the company's strategic direction, which centres on innovation and digital transformation.
Products such as OBrio, a campaign impact-measuring platform, and WPP Open, an AI tool to streamline marketing processes, are among the technologies Scangroup believes will anchor its turnaround.
The firm has ruled out further layoffs or exits, instead pinning its hopes on a revamped strategy that leans into artificial intelligence and collaborative partnerships as it seeks to recover from its financial slump.
