WPP Scangroup the marketing and communications outfit has released it half year results. As per the results, the profit before tax has taken a 38% dip to Ksh. 244 Million down from Ksh. 395 Million in 2016.
This fall in profitability can be attributed to a 22% dip in revenue to Ksh. 2 Billion down from Ksh. 2.6 Billion in the same period last year. This reduction was due to a Pan African client who reduced their level of marketing spend across the region. There was also reduced scope of work with several of their clients most probably due to a wait and see attitude adopted by many Kenyan companies as we headed to the elections. They also faced a reduced scope of work situation with their core client in Gabon.
Interest income from deposits during the period declined due to the interest rate cap law which saw it reduce by 41% to Ksh. 140 Million down from Ksh. 237 Million in 2016.
In the same period the management was able to reduce their operating expenses by 21% to Ksh. 1.8 Billion. This was due to the fact that management was able to predict the decline in revenue and took action to align their costs.
Earnings per share declined from 0.66 per share in 2016 to 0.39 per share.
The management expects that revenues will improve in the second half. They also expect that their cost reduction measures will continue bearing fruit which will see growth in full year operating profit and profit before tax.
The board did not recommend payment of an interim dividend.