NAIROBI, Aug 29 (Reuters) - Kenya’s biggest marketing firm Scangroup registered an 83 percent drop in pretax 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 pretax profit fell to 101 million shillings ($1.2 million), hit by a 91 million shilling 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 percent, from 33.62 percent 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 percent to 1.8 billion shillings, 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 percent to 68.50 shillings by 0728 GMT.