Overall digital sales at Penguin Random House are on a “positive path forward,” the company’s global c.e.o Markus Dohle has said in a letter to staff, despite the company’s first half results showing a decline due to lower e-book sales.
The company's half-year results were released this morning (31st August) revealing that PRH’s global revenues fell 10.7% in the first half of 2015 to €1.5bn (£1.27bn), due to an “expected decline in e-book sales in the United States and UK due in part to new retail sales terms", though print sales were “steady” and audiobook revenues up.
Dohle has written to staff following the results explaining that despite the drop in revenue, the company’s digital sales were on track.
“Much has been said about the new digital terms of sale and their impact on sales performance," he said. "As anticipated, our e-book revenues were lower year-on-year. But our overall digital sales—which now include a significant upswing in audiobook downloads—are on a positive path forward.”
He added: “What’s also gratifying is the strength and stability of our physical book sales. You will recall that we never bought in to the gloom and doom about the future of print. Instead we said that print would always be important, even as digital became more so. We made significant improvements in both, and the care we’ve taken with our physical supply chains, operations, and distribution centers is especially paying off now as consumer demand for physical remains robust.”
An analysis of Nielsen TCM BookScan figures in the UK for the first 26 weeks of 2016 put PRH UK’s sales at £144.3m, a 6.7% rise versus the same period in 2015. That was below the overall print market rise of 9.3%, but PRH retained its market share at 22.4% of all UK print book sales. PRH UK gave its first half 2016 digital volume figures were put at just under 5.9 million e-books sold, a drop of 16.7% year on year.
In the letter, Dohle also explained that there was “the absence of newly-published megasellers” for the company in the first six months of 2016, compared with big-hitting titles such as Paula Hawkins’ The Girl on the Train, and E L James’ Grey during the same period in 2015, which were “key drivers of revenue”.
“Happily, however, our 2016 results so far have benefited from the continuing large multiterritorial sales of Paula Hawkins’s novel and Marie Kondo’s The Life Changing Magic of Tidying Up, as well as from the Jojo Moyes and Dr. Seuss backlists, and also from the breakout launches of When Breath Becomes Air (by Paul Kalanithi) and Joy, among others,” he said. “The heart of our business performance is—and will always be—the excellence and strength of our publishing.”
The company also continues to see the benefits of the merger of Penguin and Random House, completed in July 2013, which has enabled it to maintain an “outstanding” 12% profitability, Dohle said. “This reflects the underlying health of our publishing and the long-term viability of our business model,” he added.
The company will be focussed on its core growth going forward, especially developing new approaches to driving discovery online and deploying new technologies across all marketing channels to reach more readers across social, email, web, and print campaigns.
While PRH has had a solid July and its autumn publishing line-up also looks strong, Dohle noted that 2016 had already been “a year unlike any other” and warned the company faced “many unknowns” going forward, including the future effects of Brexit, the result of the US general election and the recovery of the “challenged” Latin America local economies.
“As publishers, we are no strangers to uncertainty,” Dohle said “On the contrary, an ever-changing market landscape is what we know how to navigate steadily. This is why I am optimistic we will finish the year with another consistent, solid performance—creatively and fiscally.
“In this volatile, unpredictable world, our books can and do make a meaningful difference, and everything you do supports our larger purpose to create the future of books and long-form reading for generations to come. I thank you for your daily commitment to achieve that goal.”