Longhorn records worst loss since listing on NSE

A worker arranges books at the Longhorn Publishers warehouse in Nairobi’s industrial zone. FILE PHOTO | NMG

Longhorn Publishers recorded its worst performance since its listing on the Nairobi Stock Exchange 11 years ago, weighed down by falling textbook sales and rising printing expenses and debt servicing.

The publisher, who had issued a warning on the results, said on Friday that its net loss for the full year to June 2023 increased almost seven-fold, from Sh84.5 million to Sh571.33 million. The 2022 loss is a restatement of a net profit of Sh39.9 million.

This is the worst loss since listing on the Nairobi Stock Exchange in May 2012. The latest loss is worse than the Sh225.9 million loss recorded in 2020, when the long closure of schools due to the Covid-19 pandemic has hurt book sales. .

“Various macroeconomic challenges over the past year have had a significant impact on our business. We have witnessed rising inflation, rising interest rates, currency depreciation and a general economic slowdown in our markets, leading to lower spending on textbooks,” said the publisher.

Book piracy

Longhorn said reduced customer spending power also fueled a surge in book piracy and the used textbook market as consumers turned to cheaper, unregulated alternatives, further hurting its revenue. .

Longhorn had delayed the release of annual results, attributing this to consultations over the interpretation and application of an accounting standard that it said was likely to have a “material impact” on the financial statements.

The publisher saw its revenue fall by 27.3 percent to Sh1.07 billion, mainly attributed to delays in public procurement processes and restatements made in previous years.

Operating expenses increased by 49.5 percent to Sh637.8 million during the period. The publisher said printing costs had increased by 70 percent, reducing its gross margins from 32 percent the previous year to 18 percent.

“The increase in operating expenses was primarily attributable to one-time costs, including goodwill impairment, restructuring costs and pre-release cost write-offs of older programs which are not expected to recur,” said Longhorn.

During the period under review, financial costs increased by 37 percent to Sh182.18 million due to increased borrowing to finance curriculum development in the region and increases in loan rates. interest observed during the year.

Longhorn said its approved products continue to increase as it invests in the new educational program and expects economic benefits to be realized in the coming years once development is completed by 2026.

“We are confident that the business will recover in the coming year as we fully implement our Lean business model and digital strategy,” the publisher said.

Longhorn operates in nine markets – Kenya, Uganda, Tanzania, Rwanda, Zambia, Malawi, Democratic Republic of Congo, Cameroon and Ghana – but recently announced that it was reviewing its business model across all markets, including “markets leavers with poor economic prospects.

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