NAIROBI, Kenya August 21 — Marketing and Communications company, WPP ScanGroup has slipped into loss making territory, posting a Sh47.1million loss for the half year ended June 2022 down from a Sh31.4million profit posted in the same period in 2021.
The dismal performance comes on the back of a 6.1 per cent year on year decline in net revenues to Sh1.0bn coupled with a near doubling in provision for doubtful debts to Sh49.3m.
Management attributed revenue decline to reduced marketing spend by key clients in response to the challenging global economic environment.
“In addition, the bottom-line was dragged by an 11.0 per cent climb in tax charge to Sh56.7million,” the firm said.
During the period, the effective tax rate came in at 589.2 per cent, up from 61.9 per cent in 1H21 with analysts at SIB Group unable to tell the sustainable effective tax with the marginal profitability.
Profitability was supported by a positive on the foreign exchange line at Sh65.5million from a Sh8.3million loss in 1H21, aided by the depreciation of the KES in comparison with Scangroup’s receivables currency.
Cash generated from operations worsened 91.2 per cent y/y to a negative Sh345.1million on lower revenues and higher expenses.
Cash at year end inched up 0.9 per cent year on year to Sh3.2billion buoyed by a 45.6 per cent year on year jump in cash from investing activities to Sh2.4billion.
Operating margin declined to -10.28 per cent in 1H22 from 1.54 per cent in 1H21 due to a 4.4 per cent rise in operating expenses (OPEX) to Sh1.1billion as well as a 95.0 per cent year on year drop in other income; with sliding revenues tightening the margins.
The firm notes that the rise in costs is due to uptick in post COVID business activities and hopes to see these investments pan out well in 2H22.
