Scangroup CEO Bharat Thakrar. Scangroup registered an 89 per cent drop in net profit for the first six months of 2013, hurt by a decision to shrink its operations in Nigeria. FILE
Kenya's biggest marketing firm Scangroup registered an 89 per cent drop in net profit for the first six months of 2013, hurt by a decision to shrink its operations in Nigeria.
Scangroup, the only listed marketing and advertising company on the Kenyan bourse, said on Thursday its profit after tax fell to Sh43.6 million, hit by a Sh91 million loss in Scanad Nigeria.
The firm met headwinds when it launched its Nigerian outlet last year, after Nigeria's Prima Garnet Communications sued it and Ogilvy Africa for breach of contract and colluding to lock out smaller competitors.
"Whilst we await a decision, we have taken action in the first half to down size the operations to minimise the costs," Scangroup said in a statement.
Scangroup's main shareholder, WPP, said earlier in August it planned to raise its stake in the company to 50.1 per cent, from 33.62 per cent through the purchase of additional shares.
WPP is set to be overtaken as the world's biggest ad group by the merger of Publicis and Omnicom.
Scangroup, which also operates in Tanzania and Uganda, said its advertising revenue dipped 4 per cent to Sh1.8 billion, but said it expected to recover in the second half.
"We expect to regain the lost ground in terms of revenue and anticipate that the operating profit in 2013 ... will be at similar level as 2012, with the exception of Nigerian operations," the company said.
Its share price was down 1.4 per cent to Sh68.50 by 0728 GMT.
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