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Quarto quarter boosted by co-editions

24.04.08 Anna Richardson

Quarto, the publicly quoted book packager and publisher, has seen revenues for the first quarter of the year, ended 31st March, rise by 22% to £21m (from £17.2m in 2007), helped the contribution of £3.2m from recent acquisition MBI.

The company also saw improved sales in its co-edition segment, which increased by 15% from 27%'s first quarter.

Gross margin overall increased to 34% from 33% last year, and operating profit almost doubled to £268,000 (from £142,000 in 2007). However, the company has taken steps to dispose of its art print operation in Melbourne, Australia, "to eliminate its losses", as it "continues to languish".

Chairman and c.e.o. of the Quarto Group, Laurence Orbach said that "these results are very encouraging"

"Looked at together with the trailing 12 months' results, they suggest that our areas of book publishing (at least) are rising above wider economic uncertainties," he added. "Our co-edition forward order book is 27% ahead of the same time last year. In both the US and the UK - the two major markets in which we publish and hold book inventories - the reported sales of our titles through the cash registers actually increased during the quarter, with the notable, and anticipated, exception of the home improvement line."

In addition to the revenue that the group was beginning to derive from digital channels, its backlist looked likely to add further licensing income from TV production, and other media, added Orbach.

He did point to a weakness in "the buying patterns of some retail chains that, for their own reasons, appear to be hunkering down in response to a more generally subdued retailing environment", but predicted that "barring the appearance of unanticipated storm clouds, these results point to the likelihood of another successful year for the group".

Typically, the first quarter accounts for no more than 18-20% of Quarto's annual revenues. For the trailing 12 months, ended March 31, 2008, group revenues increased to £103.8m (2007: £92.9m), operating profit, at 10.4% of sales, rose by 12% to £10.7m (2007: £9.6m) and pre-tax profit to £7.5m (2007: £7.3m). EBITDA (earnings before interest, tax, depreciation, and amortization) rose to £20.5m from £18m last year.

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