Hachette UK slips 2.9% in 'strong' first half despite Covid

Hachette UK slips 2.9% in 'strong' first half despite Covid

Hachette UK has put in a "sterling performance" for the first half of 2020, its parent Lagardère has reported in its latest financial results, as revenue slipped 2.9% year on year amid the bookshop and school closures that took place during lockdown.

Branding it an "extremely strong" performance "despite the impact of Covid-19", David Shelley, Hachette UK c.e.o., credited bestsellers including Queenie by Candice Carty-Williams (Orion), Book of the Year at the British Book Awards, and Where The Crawdads Sing by Delia Owens (Corsair), a Richard & Judy Book Club pick. Also receiving special mention were The Silent Patient by Alex Michaelides (Orion), American Dirt by Jeanine Cummins (Headline) and The Witcher books by Andrzej Sapkowski (Gollancz).

Shelley highlighted the publisher had achieved a record number of bestsellers–264 appearances in the Sunday Times bestseller lists in the first half of this year, versus 152 in the same period last year–and had seen a "sharp increase" in market share in the UK and in Australia. 

"Our trade performance also helped to mitigate the challenges faced by our education business, which unsurprisingly has been impacted by the closure of schools during the lockdown," said Shelley. He added: "We continue to diversify our business for the future by launching in-house studios to enable us to publish a greater number of audiobooks, while a new generation of imprint, Hodder Studio, is taking a more innovative approach to storytelling across print, digital and audio. We have also announced plans to open five new regional offices—in Edinburgh, Manchester, Newcastle, Sheffield and Bristol—to help us tap into the wider creative talent pool around the UK.

"In the first half of the year, we focused our charitable efforts on emergency response during the pandemic. We provided financial support for independent booksellers and publishers, by donating to the [Book Trade Charity] BTBS fundraiser and the Inclusive Indies Fund. We also donated nearly 30,000 books, by giving free e-books to NHS workers and partnering with Neighbourly to help charities and local communities who have found it most difficult to access books during the lockdown."

Lagardère noted Hachette UK had continued to see "robust growth in digital formats" (e-books and audiobooks) during the first half, and its release schedule was "only moderately affected by the crisis".

Lagardère Publishing's total sales dropped 8.3% like for like to €971m. It had been down 3.3% in its first quarter (up 5.6% over January and February, and down 18.9% in March). Revenue in second-quarter 2020 fell 12.2% year on year (after a decrease of 38.6% in April and of 21.8% in May, and an increase of 20.6% in June). The company had previously warned at the time of its first quarter results that revenue for the division could be down by as much as 45% for April, which it avoided. It said its "balanced geographic profile" of business activities helped, as did having a diverse business portfolio, covering trade publishing, education, partworks, distribution and mobile and board games. English-speaking countries were less affected by lockdown measures, it said, "owing to the relative importance of digital media and e-commerce in these markets". 

In the US, revenue was more or less stable, slipping 1%, which Lagardère put down to the success of The Witcher series in the first quarter, as well as sales of books by the likes of James Patterson, Michael Connelly, David Baldacci and Harlan Coben. It said business was also "buoyed by the success of titles on subjects related to racism—a particularly resonant topic in the country since the end of May", and by fast-paced growth in digital formats throughout.

In France, sales fell 14.7% in the first half, owing to the lockdown in place between 17th March and 11th May. Meanwhile, in Spain/Latin America, revenue was down 5.2%, also hard hit by the closure of points of sale in the second quarter. Partworks revenue dropped 15.2%, with fewer launches in the period (13 fewer than in first-half 2019) and the absence of a runaway success that had boosted first-half 2019.

E-books accounted for 10.6% of Lagardère Publishing's total revenue in the first half of 2020, up from 8.2% in first-half 2019. Digital audiobooks represented 5.3% of revenue, versus 3.4% in first-half 2019.

Lagardère Publishing reported €27m in recurring EBIT, down €9m year on year, which it saw as a "stable" result in the circumstances, attributing it "to a more favourable revenue mix, driven by growth in backlist sales and a sharp rise in sales of e-books and audiobooks".

It said it was also "the result of the swift implementation of cost-cutting measures in all businesses and geographies. From the start of the crisis, Lagardère Publishing reacted quickly to protect the health and safety of its employees while ensuring business continuity, introducing remote working for all positions where this was feasible, and continuing distribution activities with the requisite adjustments to ensure the safety of its teams. The division also took measures to protect earnings and cash, including reducing payroll costs, cutting marketing and advertising expenditure, and decreasing overheads, while continuing to support an industry hard hit by the pandemic."