The poor reading culture among Nigerians combined with weak consumer spending have deal a blow on University press growth prospects as the publishing company said sales declined 29.21 percent in the first quarter of the year.
For the first three months through March 2015, the company’s sales were N1.72 billion from M2.43 billion the previous year. Net income increased by 41.68 percent to N136.40 million in 2015 as against N233.92 million last year.
Of the total N1.72 billion sales generated by the publishing house, Western region contributed 41.56 percent, followed by Northern region 20.58 percent and the Eastern region 37.86 percent.
Analysts attribute the faltering performance of the publishing house to the dwindling book reading culture among Nigerians as book shelves are getting slimmer, that the introduction of the internet which is a threat to the paper and the sharp drop in the purchasing power among consumers.
The combination of the prevailing macro headwinds, weak consumer discretionary spend following increased pressure on household wallets has forced consumers patronizing substandard reading materials.
Industry players also identified lack of stringent copyright law as another stumbling block to publishing business in Africa largest economy.
Government funding of education will go a long way in bolstering the sales of publishing house in Africa largest oil producer. Nigerian’s budget allocations to the education sector are below the 26 percent set by United Nation Educational, Scientist and Cultural Organization (UNESCO).
University Press cost of sales reduced by 40.03 percent to N761.53 million amid huge energy costs, payment of huge tax to the Inland Revenue service, insurance cost and outrageous amount paid as office space.
Firms spend more on petrol and diesel oil to run generators at factories as power from the grid are unstable and inconsistent.
The company is spending less to produce each unit of product as cost of sales ratio reduced to 44.24 percent in 2015 from 53.20 percent in 2014.
University Press’s gross profit was down by 16.72 percent to N966.58 million in 2015 as against N1.16 billion due to the drop in revenue. Gross profit margin increased to 56.70 percent in 2015 compared with 47.10 percent in 2014.
Net margin, a measure of profitability and efficiency fell to 7.90 percent in 2015 as against 9.60 percent last year.
Earnings per share EPS reduced to 31.62k in 2015 as against 54.22k in the preceding year. Total assets reduced by 5.05 percent to N2.82 billion in the period under review from N2.97 billion the preceding year.
Bala Augie
