High supply costs eat into book firm’s profit
What you need to know:
- The costs of distribution surged by 159 percentage points to Sh209.5 million from Sh80.8 million. “This is attributed to the heavy distribution cost incurred in a bid to entrench the Longhorn brand in the regional market,” said the firm’s management.
- Strong growth in exports to Uganda, Tanzania, Malawi and Rwanda saw revenues grow by 35 per cent to Sh1.39 billion, compared to Sh1 billion in the financial period.
Longhorn Publisher’s profit after tax in the full year period ending June 2014, rose by a marginal one per cent due to high costs of distribution and sales.
In the period under review, the book publisher’s after tax earnings increased from Sh93.9 million to Sh94.9 million.
The costs of distribution surged by 159 percentage points to Sh209.5 million from Sh80.8 million.
“This is attributed to the heavy distribution cost incurred in a bid to entrench the Longhorn brand in the regional market,” said the firm’s management.
EXPORT MARKET
Strong growth in exports to Uganda, Tanzania, Malawi and Rwanda saw revenues grow by 35 per cent to Sh1.39 billion, compared to Sh1 billion in the financial period.
Export sales, which stood at Sh457.9 million, constituted 36.5 per cent of total revenue.
The publisher also cited delayed government payments in Kenya as a challenge because their largest clients — public educational institutions — were unable to make purchases as required.
The 16 per cent VAT introduced by the Kenyan Government also pushed up costs that the publisher passed on to consumers.
Following release of its results last Friday, the publisher’s share price rallied to a historic high of Sh25 apiece.
