Crown Paints and WPP Scangroup are the latest listed companies to issue profit warnings to their investors, bringing to nine the listed firms that are anticipating lower earnings this year.
Other companies that have issued alert warnings since March are Longhorn Publishers, Sasini, Car & General, Nation Media Group, Centum Investment Company, Unga Group and Kenya Power.
Most of the notices, which could have an impact on dividends, are attributed to a tough operating environment including higher cost of doing business.
WPP Scangroup says its undertaking of restructuring which involved the firing of some of its staff also cost the company severance costs of Ksh178 million ($1.16 million) in operating and administrative expenses.
“The reason for the lower expected earnings in 2023 is due to many reasons including the continued subdued economic environments in our markets of operations that have led to cautious spending by our clients on advertising, marketing and communications,” read the warning from WPP Scangroup.
Scangroup reported a net profit of Ksh75.2 million ($491,503) in 2022 from a loss of Ksh37.9 million ($247,712) registered in 2021 and expects at most a profit of Ksh56.4 million ($368,627) in the year ending December 2023.
Crown Paints Kenya posted a 12.7 percent rise in profit to Ksh824.01 million ($5.4 million) for the year ended December 2022 driven by higher revenues.
The paint manufacturer has issued a warning anticipating a profit decline of at least 25 percent in the current financial year ending next month.
This indicates it is expecting maximum earnings of Ksh618.01 million ($4.04 million) in the period.
“The drop in the group’s performance is mainly attributed to the increased cost of raw materials, increase in transport costs, (and) volatility in foreign exchange rates and the slowdown in economic activities during the year,” said Crown Paints in the notice.
Diversified trading firm Car & General (C&G) issued a profit warning at the start of November for the 15 months ending December 2023, preparing investors for earnings decline of at least 25 percent citing a combination of factors including, foreign exchange losses on dollar exposures and deterioration of unit economics of motorcycles which hurt their sales in Kenya and demurrage costs in Tanzania.