Bonnier Publishing "wrestled with profitability problems" as the result of its rapid growth in 2017, financial accounts revealed a week before its chief executive Richard Johnson's departure, announced on Friday (23rd February).
The problems of the UK business had a “strong negative effect” on the financial results of its Swedish parent company Bonnier Books, the accounts revealed.
According to the Swedish firm, “our UK-based book publishing house Bonnier Publishing has had several years of great expansion and acquisition, but during 2017 sales lagged and write-offs affected profits.”
The document added: “After operational measures and write-offs, Bonnier Publishing has a good chance of sharply improving its profitability for 2018.”
While sales in Bonnier Books’ division were up to £708.4m (SEK 8098,000,000) in 2017 from £672.7m (SEK 7690,000,000) in 2016, operating profit (EBITDA), almost halved, from £37.3 million in 2016 to £20.3m a year later.
A “substantial increase” in e-commerce sales also hit Bonnier's retail business, which includes Pocket Shop, but its German and Swedish publishers continued to perform strongly. “On the publishing side, the two biggest publishing groups, Bonnier Media Deutschland in Germany and Swedish Bonnierförlagen, had strong publication lists together with growth in digital as well as physical book sales – and continued good profitability,” the company said.
Johnson departed Bonnier Publishing with immediate effect last week after nine years at the helm, during which time it had grown rapidly, acquiring companies such as Igloo Books, Totally Entwined and John Blake, while launching new businesses such as Blink Publishing, Hot Key Books and Bonnier Zaffre.
It also made a number of recent high-figure author poaches from rival companies, including of Wilbur Smith, who moved from HarperCollins to Bonnier Publishing in an eight-figure deal for eight new books, following in the footsteps of Lynda La Plante, who joined the firm from Simon & Schuster a year earlier.
Bonnier Books’ current chief operating officer and chief financial officer Jim Zetterlund has come in to replace Johnson as acting-chief executive. Living in the UK during the week but based in Sweden, Zetterlund said Bonnier Publishing would now increase its focus on fiction and narrative non-fiction.
“The company has reached a pivotal point in its history,” said Zetterlund. “It has secured a strong foothold in the market and now it’s time to increase our focus on fiction and narrative non-fiction and we will establish Bonnier Publishing as a fully-fledged publisher. Commercial non-fiction and mass-market publishing will continue to be an important part of our portfolio.”
Johnson has not yet commented. His background is as an accountant in corporate finance. He helped Bonnier buy Autumn Publishing in 1999 and was “asked to hold the fort for six months” while Bonnier Books “found someone who knew something about publishing,” he told the Bookseller in an interview in 2015. “After a few months it became apparent that the businesses needed a lot of restructuring and I was the right person for that," he said.
The Bookseller’s editor Philip Jones has given his views about Johnson’s departure here.