WPP Scangroup has issued a profit warning for the financial year ending December 2025, signaling deeper financial turmoil following the loss of a major client and significant internal restructuring.

The announcement to the Capital Markets Authority (CMA) means the Nairobi Securities Exchange (NSE) listed firm anticipates its net earnings to be at least 25% lower than the previous year. This would push its net loss to at least KES 633.4 million, a substantial increase from the KES 506.7 million loss recorded in 2024.

The core of Scangroup's present challenge is the termination of its 15-year relationship with telecommunications giant Airtel Africa. The account, managed by Scangroup's subsidiary Ogilvy Africa, reportedly constituted nearly a fifth of the firm's KES 2.4 billion annual sales, making its loss a material blow to the company's top line.

Restructuring and Rising Costs

Compounding the revenue loss, Scangroup has incurred a one-off severance cost exceeding KES 160 million due to a staff restructuring program aimed at right-sizing the business. This move is part of a broader effort to stabilize the company, which has faced a challenging trading environment, reduced client spending, and increased competition. In May 2023, the company laid off 102 employees, 86 of whom were on contract, as part of this ongoing restructuring.

The firm's financial health has been under pressure for several years, marked by declining gross profits, leadership changes, and a plummeting share price. The loss of the Airtel account to a rival agency founded by former Scangroup executives underscores the intense competition and talent drain affecting the marketing powerhouse.

The Kenyan Impact

For the Kenyan investor and employee, Scangroup's troubles paint a grim picture of a legacy company struggling to adapt. The continued losses and restructuring signal job insecurity in a competitive creative sector. The company's performance on the NSE, where its market capitalization stands at KES 1.14 billion, reflects dwindling investor confidence. The firm's half-year results for 2025 already showed a net loss of KES 208.3 million, though this was an improvement from the KES 252.3 million loss in the same period in 2024, largely due to reduced foreign exchange losses. However, cash reserves have dwindled, dropping from KES 2.04 billion to KES 1.14 billion.

• Projected 2025 Net Loss: At least KES 633.4 million
• 2024 Net Loss: KES 506.7 million
• Restructuring Costs: Over KES 160 million
• Key Client Loss: Airtel Africa, after 15 years

Analysts note that while cost-cutting measures have helped narrow losses intermittently, they have not yet paved a path to sustained profitability. With the board not recommending an interim dividend, shareholders' patience will be tested as the company navigates these turbulent waters. The focus for the remainder of the year, as stated by the company, is to stabilize its client portfolio and prepare for growth in a cost-conscious manner.