Kenya, November 7, 2017 – The Standard Group has warned that its earnings for the year ended December 31, 2017 will fall by at least a quarter compared to last year, hurt by the disruptive elections witnessed in the country this year.
Its pre-tax profit was Ksh269.48 million last year, meaning 2017 earnings will drop by at least Ksh67.4 million, placing this year’s total earnings at about Ksh202.1 million.
The Nairobi Securities Exchange listed company which owns television stations, a radio station, publishes newspapers, websites and does outdoor advertisement, says the market has had adverse conditions in the second half of the tear.
The Mombasa Road based company and Kenya’s second largest media house, reported to the NSE on Friday.
“The board of directors anticipates that the financial results for the year ended December 31, 2017 will be materially affected by prevailing adverse market conditions in the second half of the year compared to the same period in the year 2016,” acting CEO Orlando Lyomu said in a public notice.
He said the board therefore projects that the group’s earnings for the year ended December 31, 2017 will be at least 25 per cent lower.
“The group performance during the first half of the year was positive and ahead of 2016. However, the business environment since August 2017 has been adversely affected by the prolonged and disruptive election period,” he said.
The political environment, he said, has had a negative impact on the economy both in terms of volumes of business transacted and shrinkage of cash in circulation, thereby affecting the company’s revenues and cash flows significantly.
“The board and management are optimistic that the business environment will normalize. However, any positive impact is expected to be realized in 2018,” Lyomu said.
The company is counting on a medium term strategic plans to insulate the group from sudden changes in the market in terms of revenue generation capacity, going forward.
Media houses in Kenya are struggling to break even in the wake of reduced spending on advertisement by corporates.
The mainstream media houses also suffered a major blow this year after the government placed all its ads under the Government Advertising Agency, a policy that has controlled advertising by state corporations, ministries and other government entities.
By Martin Mwita