Strong performance by PRH as Bertelsmann records highest first half for 12 years

Strong performance by PRH as Bertelsmann records highest first half for 12 years

Penguin Random House's parent company Bertelsmann has reported its highest first half for 12 years with €8.6bn group revenues, with PRH’s successful performance attributed to “strong bestsellers, high growth rates in audio formats, and acquisitions”.

In regards to Bertelsmann’s profits overall, the company which has owned a 75% stake in PRH since 2017, reported a 4.6% to €8.6bn in the first half of 2019 (up from €8.2bn last year). This is the highest first half of a year for Bertelsmann for 12 years. Organic growth improved significantly to 3.2 percent (H1 2018: 2.4 percent). Penguin Random House was cited as one of the strongest performing businesses in the results, released on Thursday (29th August). 

Operating Earnings Before Interest, Tax, and Amortisation (EBITA) improved “significantly” to €1.29bn (up 20% from last year’s first half of €1.07 bn), setting a new record – even excluding the one-off positive effect of the first-time application of the new accounting standard for leasing liabilities. “Almost all Bertelsmann divisions improved their operating profit, led by Penguin Random House and Arvato,” the results read. Group profit remained stable at  €502m, compared to €501m last year.

Breaking down Bertelsmann's results further, PRH performed particularly strongly across a number of areas. Operating EBITDA rose by a third - 33% - to €227m, up from €171m in the prior-year period.

“Penguin Random House had a strong first half of 2019, in which the trade publishing group increased its sales, earnings and market share in key markets,” the results read. Including Verlagsgruppe Random House (the German-based publisher), which is wholly owned by Bertelsmann, revenues amounted to €1.7bn, up from €1.5bn last year. This 11% rise “is mainly attributable to strong bestsellers, high growth rates in audio formats, and acquisitions”. Audiobooks showed 30% growth in the in the US and Britain.

The first half of the year was dominated by strong bestseller performances, led primarily by Becoming, the autobiography of former First Lady Michelle Obama. With the editions licensed and coordinated by PRH in 45 languages across all formats, worldwide sales of the book since its release total more than 11.5 million copies.

Other top performing titles included Where the Crawdads Sing by Delia Owens and The Mister by 50 Shades of Grey author E L James. “In the United Kingdom, 46% of all titles on the Sunday Times bestseller lists were published by Penguin Random House UK imprints (H1 2018: 41 percent),” the report reads.

PRH also attributed to its strong performance to a number of acquisitions. PRH acquired the British children’s book publisher Little Tiger Group in March, as well as a 45% stake in the US publisher Sourcebooks in May. Meanwhile Penguin Random House Grupo Editorial, the publishing group's presence in Spain, also recently expanded its leading position in the Spanish-language market with the acquisition of the Ediciones Salamandra publishing group.

In a circular to all PRH employees, c.e.o. Markus Dohle said: “Because of your efforts and your great publishing, Penguin Random House’s top- and bottom-line revenue is up overall in most of our key markets. The hundreds of bestsellers we have published this year globally have helped us to increase our organic market share in several countries since last year at this time. In addition, we can all continue to be proud of the growth in our booming audiobooks businesses, our thriving portfolio of client publishers, and our gold-standard supply chains.”

Dohle cited “further progress in the implementation of our growth strategy” around the purchase of Little Tiger Group as well as the various other acquisitions. He also noted the importance of the organisation’s recent expansion into South East Asia. “At our newest publishing start-up, Penguin Random House South East Asia in Singapore, we have published our debut list of adult and children’s fiction and nonfiction books by local and international authors this spring.  And in India we have acquired a distribution business in Delhi with storage capacity for 10 million books.” 

He went on to discuss how PRH is recognised as “one of the world’s very best places to work” – in the UK PRH recently announced a significantly enhanced parental leave policy – and noted how publishing’s busiest period was about to start.

“In all our companies, next week we begin our most important selling season of the year with a book for everyone—a long and impressive list of bestselling adult and children’s fiction and nonfiction authors, and audience favorites, literally from A to Z: Margaret Atwood to Zadie Smith.  What a privilege it is, as ever, to publish our authors and to connect them with readers everywhere.  Thank you for making the world a better place in support of our books and our purpose as a cultural institution.”

Thomas Rabe, chairman and c.e.o. of Bertelsmann, said of the German multinational corporation's results: “Bertelsmann had a very successful first half of 2019. In the past few months, we once again stepped up the pace of our growth; the expansion of our digital and growth businesses is increasingly paying off. Bertelsmann is now a faster-growing, more digital, more international, and more diversified company. We will further increase our investments in local premium content and service offerings in the years ahead. In doing so, we will increasingly rely on partnerships across divisions and across sectors – the best example being the successful launch of the Bertelsmann Content Alliance.”

The results follow a strong performance from Bertelsmann over the past few years, with the company reporting its highest first quarter since 2008 with €4.2 billion group revenues in May.