Longhorn issues profit warning as virus bites

Longhorn Publishers #ticker:LKL has issued a profit warning for the year ending this month, preparing investors for a fall in earnings for the first time in five years on account of disrupted learning caused by Covid-19.

The firm says the pandemic and the related mitigating measures such as closure of schools implemented in Kenya and other regional markets where it operates have had an adverse impact on its business.

The Capital Markets Authority (CMA) requires all Nairobi-Securities Exchange (NSE) firms to inform investors in advance whenever they anticipate their earnings to fall by at least 25 percent.

This is in line with Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations 2002.

“The board of directors, having reviewed the group’s performance forecast has determined that the earnings for the financial year ending June 30, 2020 will be lower than the earnings for the previous year,” said the publisher in a statement.

This will mark the first time in five years for the NSE-listed firm to fail to record profit growth.

The publisher has been consistently growing earnings since jumping into Sh104 million net profit territory in 2016. Net earnings to the year ended June 2019 grew to Sh185.1 million from the previous year’s Sh183.6 million.

President Uhuru Kenyatta on Saturday hinted at gradual reopening of schools starting September.

This means that part of first term and entire second term of school calendar have been lost. Schools were closed in mid-March after Kenya reported the first coronavirus case.

Longhorn’s net earnings in the half year ended December grew marginally to Sh68.9 million from Sh68.84 million despite gross revenue growing by four percent to Sh725.4 million.

The firm had earlier anticipated better business performance in this second half running between January and June on increased distribution of competency-based curriculum books and other learning materials. Other firms that have issued profit warning due to Covid-19 include East African Breweries Limited #ticker:EABL and Nation Media Group #ticker:NMG.