Penguin Random House owner Bertelsmann has reported a first quarter revenue decline of 2.7% in what it said was a “satisfactory” performance given the challenge of Covid-19.
The company, which warned coronavirus meant it could not make an accurate economic forecast for the rest of 2020, saw revenues decline to €4.1bn in the first three months of the year. That was down from €4.2bn in the same period last year when it recorded its highest first quarter growth since 2008.
PRH saw a rise in demand for children's and young adult books, and an increase in physical online sales during March, the company reported. Bertelsmann is now the sole owner of PRH after buying Pearson's 25% stake on 1st April.
For Bertelsmann as a whole, organic growth fell to 2.1% while its "high-growth" businesses recorded a a 2.8% revenue increase, putting their share of total revenue at 36%.
Bertelsmann chairman and c.e.o. Thomas Rabe said: “The 2020 business year, with the economic fallout from the coronavirus pandemic, will be a challenge. We started the year well, but have been feeling an increasing impact on our businesses since March. We took a number of measures early on to protect the health of our employees and safeguard our businesses.
“Bertelsmann’s broad-based business portfolio is having a positive effect, as is the high proportion of digital businesses, which last fiscal year for the first time accounted for more than 50% of our total revenues. In crises such as these, our media businesses in particular are of high societal relevance and an integral part of the critical infrastructure. We inform and entertain millions of people every day.”
Rabe singled out some of the firm's contributions to helping countries cope with the impact of coronavirus, including PRH in the US donating books to reader groups and those severely hit by social isolation.
Bernd Hirsch, c.f.o, added: “We adopted a raft of measures at an early stage to secure and increase the company’s liquidity. Among other things, we successfully placed a €750m Eurobond with a term of eight years. We also considerably increased our liquid assets with additional short-term measures. We will replace these with longer-term financing at the appropriate time and as needed, to further optimize Bertelsmann’s financing costs and maturity profile."
But he noted: “Against the backdrop of the fast developing coronavirus crisis, the forecast for the 2020 financial year published in the annual report 2019 cannot be maintained. Nor is a reliable assessment of the further business development for 2020 possible at this time. We have taken numerous countermeasures in the area of costs and investments, but expect to see negative effects on our earnings situation in the months ahead.”
Last month, Bertelsmann posted profits and revenues were up 6.2% at PRH in 2019. However, the publisher's c.e.o. Markus Dohle warned the pandemic meant it was "inevitable that we will have to endure some impact on our business" and PRH would "need to adjust and adapt our business on a daily basis and maintain a very cost- and cash-conscious approach".