Longhorn Publishers #ticker:LKL has sunk into Sh225.9 million loss, the first in eight years, as the closure of schools due to Covid-19 pandemic hurt book sales.
The publisher, which had issued a profit warning, said on Friday its full-year to June 2020 net earnings had retreated from the Sh185.1 million profit booked the previous year.
This marks the first time in five years for the publisher to fail to grow its earnings. It is also the first loss since 2012 when it booked Sh11.79 million loss.
The loss highlights the impact of Covid-19 on Longhorn’s earnings as sales revenue dipped by 33.3 percent to Sh1.06 billion.
“The revenue growth of four percent in the first half of the year was offset by a 62 percent decline in the second half, attributable to the Covid-19 pandemic,” it said.
Longhorn had made a Sh69 million net profit in the first six months to December 2019. But earnings were affected following schools closure by the government in March as it moved to control the spread of the infectious virus.
Only Tanzania, where learning was not heavily disrupted, posted a 33 percent rise in sales revenue as Uganda saw a 15 percent decline.
Longhorn board has frozen dividend payout on the back of the loss position, in contrast with previous year when it paid investors Sh142 million.
The textbook maker’s loss position was worsened by a rise in operating expenses which factored in Sh22.18 million redundancy costs and Sh68.82 million provisions for default on credit sales.
Longhorn says it expects significant credit losses following a slowdown in collections from its customers owing to Covid-19 economic hardships.
“The expected credit loss provisions are expected to reverse and will be booked as gains in the future as collections from customers improve,” said the firm.
Finance costs increased by 58 percent to Sh151.9 million mainly attributable to the borrowings to support the regional expansion, product diversification and the digital transformation.