Thursday, September 01, 2016

Sales and Profit Down More Than 10 Percent At Penguin Random House

Bertelsmann reported results for the first half of 2016 on Wednesday morning, with book publisher Penguin Random House recording sales of €1.516 billion (down €181 million, or 10.7 percent, from a year ago), including the wholly-owned RH Germany. EBITDA fell in line with sales, down 10.6 percent to €185 million (or €22 million lower than the same period a year ago.) Those declines came despite persistent strength in the US dollar, which drove the division's big topline gains in 2015. The average US dollar exchange rate for the first half was 1.1161, compared to 1.1152 a year ago. The British pound did slide by 6 percent, and could fall further against the Euro by the end of the year.

Bertelsmann notes that shortfall was due to "an expected decline in e-book sales in the United States and UK due in part to new retail sales terms." Also of significance were "the financial impact on revenues from portfolio changes" (e.g. the sale of Author Solutions) and "negative currency effects" primarily from the UK, which "were partly offset by steady physical book sales, and growth in the audio format." The top-selling title in the US were the two Jojo Moyes novels, which sold 2.4 million copies (and 3.8 million units across all PRH companies, and Paula Hawkins' The Girl on the Train, which sold more than 800,000 units (and 2.2 million units in all).

CEO Markus Dohle wrote to employees to help them "understand some of the reasons why" results declined. Primarily is "the absence of newly published megasellers" along with the "anticipated" decline in ebook revenues. More broadly, "2016 has been a year unlike any other, and there are many unknowns still to be faced."

Publishers Lunch

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