University Press Profit Drops 52% Despite Revenue Growth

By Kingsley Ani

University Press Plc reported audited results for the financial year ended 31 March 2026, with revenue rising 14.47% year-on-year to N3.89 billion, but profitability weakened sharply as higher production, marketing and operating costs outweighed sales growth. Profit before tax fell 37.15% to N389.52 million, while profit after tax declined 52% to N213.67 million. Earnings per share also dropped 52.58% to 49.53 kobo. Despite the earnings contraction, the board recommended a dividend of 18 kobo per ordinary share, payable on 24 September 2026 subject to shareholder approval. Revenue expansion was led by stronger Northern regional sales and increased demand for primary school books, while weaker non-core income and rising operating costs compressed margins.

DECISION HIGHLIGHT

The board chose to increase shareholder cash returns through an 18 kobo dividend despite a sharp decline in earnings, signalling confidence in balance sheet strength rather than current profit momentum.

DECISION MEMO

University Press’ 2026 performance illustrates the limits of revenue growth without cost discipline. Sales expanded across key markets, particularly in the Northern region, while primary education publishing became the dominant revenue driver. However, cost inflation across production, distribution and operations more than offset those gains.

The collapse in other operating income further exposed the quality of earnings. The previous year’s sizeable gains from asset disposals were not repeated, leaving the core publishing business to absorb rising operating expenses without the support of exceptional income.

Management’s dividend recommendation indicates an attempt to preserve investor confidence despite weaker profitability. With shareholders’ funds accounting for more than three-quarters of total assets and operating cash outflow improving materially, the company appears to be relying on financial resilience rather than earnings growth to sustain distributions.

The results also reinforce the structural challenge facing traditional publishing businesses, where higher input costs can rapidly erode margins even when demand remains relatively stable.

DATA BOX

Operational drivers

• Northern region contributed 37.19% of revenue after strong sales growth.
• Western region remained the largest market with 45.25% of revenue.
• Primary books generated 57.07% of total revenue.
• Cost of sales, marketing and distribution expenses all rose faster than revenue.
• Other operating income fell sharply as asset disposal gains declined.

WHO WINS / WHO LOSES

Winners

• Existing shareholders receiving a higher dividend despite weaker earnings.
• Primary education publishing segment, which remained the company’s strongest growth engine.

Losers

• Profitability, as operating costs and lower non-core income compressed margins.
• Equity investors focused on earnings growth, with earnings per share falling by more than half and the share price remaining under pressure.

POLICY SIGNALS

The results underline continued cost pressures across Nigeria’s education publishing industry. Revenue growth alone is becoming insufficient to sustain earnings where paper, logistics, distribution and operating expenses continue to rise faster than sales. The performance also reflects the growing importance of recurring core publishing income over one-off asset disposal gains.

INVESTOR SIGNAL

The dividend recommendation provides short-term support for shareholder returns, but investors are likely to focus on whether management can restore operating margins. Revenue momentum remains positive, balance sheet leverage is relatively conservative, and operating cash flow has improved, yet sustained earnings recovery will depend on stronger cost management and improved margin quality.

RISK RADAR

• Persistent inflation in production and distribution costs.
• Margin compression if cost growth continues to outpace revenue.
• Heavy inventory position increasing working-capital requirements.
• Continued dependence on the primary education segment for revenue growth.
• Weak share price performance could weigh on market sentiment despite dividend support.