WPP Scangroup Plc has issued another profit warning, its third in as many years, signalling that the advertising and communications firm expects a sharp decline in earnings for the year ending December 31, 2025. The Nairobi Securities Exchange-listed company said its net consolidated earnings will be at least 25% lower than those reported in the 2024 financial year, reflecting sustained pressure across the advertising sector and company-specific headwinds.
In a notice released on December 19, 2025, the board of directors said a preliminary assessment of the group’s projected consolidated results pointed to materially weaker performance, driven by reduced client spending, the loss of a significant customer, lower interest income and the financial impact of a comprehensive restructuring programme.
“This announcement is made pursuant to the continuing obligations under paragraph 14.5.7 of the Thirteenth Schedule to the Capital Markets (Public Offers, Listings and Disclosures) Regulations 2023,” the company said, underscoring the regulatory requirement to alert shareholders and the market when earnings are expected to deviate significantly from prior results.
Loss of a major client weighs on revenues
One of the most significant factors cited in the profit warning is the loss of a material client during the year. Market sources have linked the exit to Airtel Africa, which is estimated to have contributed roughly 20% of WPP Scangroup’s annual sales in 2024. The group reported turnover of about KES 2.4 billion in that year, highlighting the scale of revenue exposure associated with the account.
While WPP Scangroup did not name the client in its formal announcement, the loss of such a large account has had an immediate impact on revenues, particularly at a time when competition for advertising budgets across East Africa has intensified. Industry analysts say the departure underscores the growing pressure facing agency groups as multinational clients rationalise marketing spend and increasingly centralise regional and global contracts.
Beyond the client loss, the company pointed to broader reductions in client spending as businesses across multiple sectors tighten budgets amid a challenging macroeconomic environment. Higher operating costs, elevated interest rates earlier in the year and cautious consumer demand have prompted many advertisers to scale back campaigns or shift spending to lower-cost digital channels.
Lower interest income adds to pressure
WPP Scangroup also flagged lower interest income as a contributing factor to the expected earnings decline. In previous years, interest income from cash balances and short-term investments has provided a modest buffer against volatility in operating performance. The company said this income stream weakened in 2025, further compressing overall profitability.
The combination of softer revenues and reduced ancillary income has amplified the impact on the bottom line, leaving limited room to absorb additional costs without affecting earnings.
Restructuring leads to KES 160 million one-off cost
To respond to the changing business environment, WPP Scangroup undertook what it described as a comprehensive restructuring programme aimed at “right-sizing the cost base and reshaping the staff structure” to better align with current and future client needs.
The exercise resulted in a one-off severance cost of over KES 160 million, which has been included in operating and administrative expenses for the year. While the company said the restructuring is intended to improve competitiveness and long-term efficiency, the upfront cost has weighed heavily on 2025 earnings.
“The Company continues to optimize and transform the business operations across the Group to deliver competitiveness and value,” the board said, signalling that further operational changes may follow as the group adapts to evolving market conditions.
Third profit warning in three years
The latest announcement marks the third consecutive year that WPP Scangroup has issued a profit warning, following similar notices in 2023 and 2024. The repeated warnings highlight the prolonged strain facing the advertising sector, both locally and globally, as traditional agency models are disrupted by digital platforms, in-house marketing teams and shifting client expectations.
For investors, the pattern raises questions about the pace of recovery and the effectiveness of strategic responses undertaken to date. Shares of the company have faced pressure in recent years as earnings visibility weakened and concerns grew over client concentration and margin sustainability.
Market participants note that while restructuring and cost optimisation may support future performance, the near-term outlook remains uncertain, particularly if client spending remains subdued and competition intensifies.
Industry-wide challenges persist
WPP Scangroup’s warning comes against the backdrop of broader challenges across the advertising and communications industry in Kenya and the wider region. Slower economic growth, currency volatility and cautious corporate spending have constrained advertising budgets, while clients increasingly demand measurable returns on investment and flexible, data-driven solutions.
Agency groups have also faced rising staff and technology costs, even as fee pressure persists. These dynamics have forced many firms to rethink operating models, consolidate operations or exit less profitable segments.
Analysts say that for WPP Scangroup, diversifying the client base and deepening capabilities in digital, data and performance marketing will be critical to stabilising revenues over the medium term. Reducing reliance on a small number of large accounts is also seen as key to mitigating future earnings shocks.
Regulatory disclosure and outlook
The profit warning was issued with the approval of the Capital Markets Authority, in line with disclosure regulations governing listed companies. In its disclaimer, the authority noted that it assumes no responsibility for the correctness of the statements contained in the announcement, emphasising that the information is provided for market transparency.
WPP Scangroup said the notice is based on a preliminary assessment of its projected results, with full audited financial statements to be released in due course. Until then, investors are likely to remain cautious as they assess the depth of the earnings decline and the prospects for recovery in 2026 and beyond.
The announcement was signed by company secretary Winniefred Jumba on behalf of the board, reinforcing the seriousness of the outlook and the need to keep shareholders and the public informed.
