Learn Africa and University Press recorded the highest working capital in the period ended June (H1) 2024, according to BusinessDay analysis.
Learn Africa’s working capital stood at N3.4 billion in H1 2024, though this was a drop from N3.8 billion in the corresponding period of 2023. Similarly, University Press’ working capital totalled N2.9 billion in H1 2024, even though this was a decrease from N3.17 billion in the same period of 2023. Academy Press’ working capital was N661 million, up from N181 million in H1 2023.
Positive working capital refers to the situation where a company’s current assets exceed current liabilities. This indicates that the company has enough short-term assets (such as cash, inventory, or accounts receivable) to cover its short-term liabilities (such as accounts payable, short-term loans, or wages).
Data tracked by BusinessDay reveal that the three publishing listed firms accumulated a positive working capital of N6.75 billion in the period ended June 2024 from N7.36 billion.
Academy Press reported an increase in its after-tax profit to N519 million in H1 20240, up from N38 million in H1 2023, resulting in a positive profit margin of 28.05 percent.
Both Learn Africa and University Press posted after-tax losses of N205 million and N164 million, respectively.
These losses led to negative profit margins, as their operational and production costs exceeded revenue. Learn Africa reported a negative profit margin of 164 percent, while University Press recorded a negative profit margin of 105 percent.
The Nigerian printing industry is facing shrinking profit margins due to the high cost of operations in the country.
Olugbemi Malomo, national president of the Chartered Institute of Professional Printers of Nigeria, in an earlier report, lamented that the heavy reliance of the major spenders like the Independent National Electoral Commission (INEC) and the Universal Basic Education Commission (UBEC) on foreign printers is killing the local printing industry.
“The Federal Government should come up with a deliberate policy that would make its big spenders like the INEC and UBEC part of the solution to local paper production,” Malamo said. “With 60 percent of Nigeria’s population in one school or the other and over 1. 2 billion books printed annually, imagine if all these papers are sourced locally,” he said.
The listed publishing houses recorded negative working capital during the period reviewed.
University Press reported the highest negative cash from operations of N632 million in H1 2024, from N741 million in the same period of 2023, followed by Academy Press with N313 billion in H1 2024 from a positive N199 million in H1 2023. Learn Africa Plc’s stood at N136 million from N595 million.
Read also: Nigeria’s oldest publishing houses battle for market share
Experts’ View
Uchenna Uzo, professor of marketing at Lagos Business School, attributed these widespread losses to a combination of external and internal factors.
“Externally, global economic uncertainties and trade disruptions have had a ripple effect on Nigeria’s economy. Internally, policy inconsistencies, infrastructural deficits, and security concerns have exacerbated the situation.
“Rising production costs, supply chain disruptions, and reduced consumer spending power have significantly dented profitability. Major manufacturers, once robust and thriving, are now grappling with dwindling revenues and escalating operational expenses,” he added.
Israel Odubola, a Lagos-based economist, said that a decline/ negative in cash flow from operating activities typically means a company is generating less cash from its core business operations. It shows that businesses across diverse sectors are struggling to generate adequate cash to maintain or grow their operations, he noted.
“With higher inflationary pressure and weakening naira, these companies are spending more money on operations from raw materials procurement to maintenance, thereby reducing the amount of cash left over from core business activities,” he said.
Negative cash flows
Academy Press, Learn Africa, and University Press all reported negative operating cash flows of 29.53 percent, 11.72 percent, and 38.77 percent, respectively.
An operating cash flow ratio of less than one indicates that the firm has not generated enough cash to cover its current liabilities while a number greater than one symbolises that a company has generated more cash in a period than what is needed to pay off its current liabilities.
Learn Africa reported a negative profit margin of 164 percent, while University Press recorded a negative profit margin of 105 percent.
Paper Imports Into Nigeria
According to the National Bureau of Statistics (NBS), Nigeria spent N1.99 trillion on the importation of paper and its allied products in five years.
Data obtained from the NBS showed Nigeria’s importation of paper and its allied products grew by 39 percent to N573.1 billion in 2023 from N412.2 billion in 2022.
A further breakdown showed Nigeria’s paper imports gobbled up N328.9 billion in 2021, N188.6 billion in 2020, and N491 billion in 2019.
The CEOs Confidence Index report of the Manufacturing Association of Nigeria (MAN) showed the score of the pulp, paper, printing, and publishing sector fell to 49.6 points in the fourth quarter of 2022 from 50.9 points in the previous quarter.
The rise of e-books, online education platforms, and self-publishing models has intensified the competition, as younger publishing firms adopt digital-first strategies that appeal to a tech-savvy generation.
Falling Revenue
A further breakdown of the firms’ financial statements shows that their total revenue fell to N2.13 billion in H1 of 2024, from N2.8 billion in the same period of 2023.
The financial scorecard for these companies showed that despite the high cost of production and inflationary pressure which have driven the price of raw materials, particularly paper, the three listed Nigeria printing firms’ combined cost of sales fell to N906 million in the first half of 2024 from N1.9 billion in the similar period of 2023.
In a race for market share, Academy Press Plc, one of Nigeria’s oldest publishing houses, gained more market share in its first quarter ended June 30, 2024.
The shares of other listed publishing houses, Learn Africa Plc and University Press Plc market, fell amid mounting economic challenges.
Market share is the percent of total sales in an industry generated by a particular company. It is calculated by dividing the company’s sales over the period by the industry’s total sales over the same period, giving an idea of the size of a company to its market and competitors.
Academy Press retained the top position as it held 86.81 percent of the share, higher than 68.94 percent reported in the period ended June 2023.
On the flip side, Learn Africa and University Press recorded declines during the period.
Learn Africa’s share dropped to 5.87 percent from 21.29 percent during the period reviewed while University Press fell to 7.32 percent from 9.77 percent.
The Central Bank of Nigeria (CBN) Purchasing Managers Index report disclosed that printing & related support activities contracted to 48.8 percentage point in August from 45.6 percentage point in July 2024.
The PMI index, which measures the performance of business activities, is based on changes in different aspects of respondents’ business activities.
An index above 50.0 points indicates an expansion in business activities while below 50.0 points indicates a contraction in business activities.
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