Longhorn invests Sh200m in regional arms

Longhorn Publishers Limited MD Musyoki Muli . PHOTO| FILE| NATION MEDIA GROUP

What you need to know:

  • In Uganda, the company grew by developing learning materials for the market. And towards the end of last year, Longhorn acquired the rights of 15 book titles from Tanzania’s Apex Publishers in a bid to break into the neighbouring country’s tough book publishing market.

  • The deal with Apex Publishers would enable Longhorn to tap the fast growing number of schools in Tanzania that are embracing English as a medium of instruction.

  • The growth of the middle class in Tanzania following the collapse of socialism has led to a rapid growth of schools that use English as opposed to Kiswahili only as the primary mode of instruction.

Book firm, Longhorn Publishers, plans to inject Sh200 million into its Uganda and Tanzania outfits for development of new products in a bid to make the arms profitable.

“We are first growing the product base, strengthening the product and performance by increasing the capacity of the subsidiaries to ably support sales, marketing and the administrative outfits,” company managing director, Mr Musyoki Muli, said during the rebranding of the publisher last week.

“We want to grow them to a level where they are almost independent and where they can declare profits.”

He said the parent company based in Kenya has not been providing enough support for the regional units to run as expected.

“It’s like failing to feed a cow and expecting it to give you milk. Now, we are feeding the cows to fast-track their profitability,” he said.   “We have allocated Sh120 million for Tanzania and Sh80 million for Uganda for product development”.

Cross-list

Strengthening of the subsidiaries is expected to usher in plans by the publisher to cross-list on the bourses in East Africa in about one-and-a half years.

The firm has already received shareholder’s approval to cross-list. If successful, Longhorn would join Kenya Commercial Bank, Equity Bank, East African Breweries, Nation Media Group, Uchumi and Umeme — a Ugandan electricity firm — which have cross-listed on the Uganda Securities Exchange, Dar es Salaam Stock Exchange, Nairobi Securities Exchange (NSE) and the Rwanda Stock Exchange.

Longhorn listed on the NSE on May 30, 2012 becoming the first book publishing company to do so. The firm was launched in the country as a wholly Kenyan-owned book publisher in 1994.

In 2012, through local agents, Longhorn entered Malawi with its secondary school study books getting approval by the education authorities in the southern African country. It also has presence in Zambia through local agents.

In 2007, Longhorn acquired Sasa Sema Publications before buying Malkiat Singh — a publisher of revision book series in Kenya — in 2013.

In Uganda, the company grew by developing learning materials for the market. And towards the end of last year, Longhorn acquired the rights of 15 book titles from Tanzania’s Apex Publishers in a bid to break into the neighbouring country’s tough book publishing market.

The deal with Apex Publishers would enable Longhorn to tap the fast growing number of schools in Tanzania that are embracing English as a medium of instruction.

The growth of the middle class in Tanzania following the collapse of socialism has led to a rapid growth of schools that use English as opposed to Kiswahili only as the primary mode of instruction.

The firm now says it has given itself a year and a half to consolidate and strengthen its subsidiaries.

“The profitability in the subsidiaries has not been consistent. Our projection is that in the next one and a half years, the subsidiaries would be making profits consistently,” Mr Muli said.

The publisher also continues to report robust increase in exports to Uganda, Malawi, Rwanda, South Sudan, Zambia and Ghana, where it says a number of its books are used as media of instruction in schools. Eyeing growth in the regional market, the firm rebranded by expunging ‘Kenya’ from its trade name, Longhorn Kenya Publishers Ltd.

Regional appeal

The new trade name, Longhorn Publishers Ltd, would give it a regional appeal, the firm said.

“We were getting challenges when we wanted to venture into new markets. For instance, when you go to, say Malawi as Longhorn Kenya, you look like a person who has gone there on a mercenary trip to reap and come back,” Mr Muli noted.

Venturing into the export realm amid rising competition in the local market, book pirates and the emergence of digital learning platforms have partly fuelled the publisher’s growth in external markets. For instance, exports to Uganda, Tanzania, Malawi and Rwanda in the last financial year (to June 2014) generated Sh458 million in revenue, constituting 37 per cent of the total revenue.

Distribution costs

In the full year period ending June last year, the publisher’s net profit rose by one per cent to Sh95 million from Sh94 million a year earlier following high costs of sales and distribution, especially in Tanzania.

Sales and distribution costs in the year surged by 159 percentage points to Sh210 million from Sh80.8 million in the year ending June 2013.

The high costs incurred in distribution was part of the listed-publisher’s strategy to entrench its brand in the regional market, where it has aggressively expanded into recently.