PRH records revenue and profit jump

PRH records revenue and profit jump

Penguin Random House global revenues rose 11.8% in 2015 to €3.7bn (up from €3.3bn the previous year), with operating EBITDA rising by 23.2% to €557m (€452m in previous year).

Parent company Bertelsmann said that, besides positive exchange range effects, this was attributable to savings from the largely completed integration of Penguin and Random House, and its strong bestseller lineup. The EBITDA margin was 15% (up from 13.6% the previous year).

The PRH results were announced as part of Bertelsmann's results as a whole; Bertelsmann saw 2.8% growth in 2015 revenues from continuing operations to €17.1bn (up from €16.7bn the previous year), the highest level since 2007.  The company said its strategic transformation was "paying off", with expansion of its education, media and financial services businesses, and digital growth in Gruner + Jahr and RTL Group having a positive effect, while structurally declining businesses were "further downscaled".

"Positive currency effects" played a part, as they did too in the rise of operating EBITDA, up 4.7% to €2.49bn (€2.37bn the previous year), but Bertelsmann also cited "a strong bestseller business at Penguin Random House" among contributory factors to the result. Group profit improved over 90% to €1.1bn (€572m the previous year), its highest level since 2006.

Thomas Rabe, chairman and c.e.o., said: "2015 was a very good year for Bertelsmann. For the first time in eight years, our revenues again are above €17bn and we have achieved one of the best operating EBITDAs in Bertelsmann's history. Also, excluding results from disposals, Bertelsmann's Group profit was never before as high as in 2015. Since 2012, we have been systematically driving forward the transformation of Bertelsmann – including investments totally over €3bn in digital and growth businesses."

Rabe said Bertelsmann had taken major steps in 2015 in all its four strategic priorities: strengthening its core, digital transformation, expanding growth platforms and forging ahead in growth regions including China, Brazil and India.

At Penguin Random House, Bertelsmann picked out bestsellers The Girl on the Train by Paula Hawkins, which has sold seven million copies in the English and German speaking world across all PRH formats, including e-book and audiobook,  and E L James' Grey, which has sold eight and a half million copies in English, German and Spanish.

PRH UK "grew profitably", Bertelsmann noted. However in the US, PRH e-book sales were affected "by new retail sales terms", the company said. Penguin Random House Grupo Editorial saw the beginnings of a recovery amidst the ongoing volatility of the Spanish marketplace. Verlagsgruppe Random House in Germany "increased its revenues and achieved a record operating result."

Bertelsmann's employees will receive profit participation totalling €95m, up from €85m last year. Penguin Random House UK employees are understood to benefit from an annual bonus scheme, with payments being made this month.

In a letter to staff this morning (22nd March), PRH c.e.o. Markus Dohle said the second full year of the company had seen "major strides" in its evolution. "Even in more challenging economic climates we were able to nimbly and effectively address challenges and embrace opportunities," he wrote. "I am proud of our decentralised structure, which empowers our leadership to support their respective talent, culture, and publishing ecosystems."

He added: "In a year characterised by the unpredictability inherent in this business, our teams brought drop-in titles and debut authors to coveted accolades and record sales. With our increased publishing portfolio and expanded capabilities as Penguin Random House, it becomes ever more likely that many of the authors we champion will break out. In 2015 we increased those odds by emphasising our role as the most creative home for publishing and author talent and by reinforcing a service-oriented mindset at every level – one that makes authors feel like part of our family, gives retailers compelling reasons to partner with us, and ensures that readers can discover our books."

He promised that, with the integration of the company becoming "smaller in the rearview", PRH could now squarely focus on the future. "As we continue to drive innovation around our reader-centric, service-oriented strategy supporting our content and our authors, we will become more than just a publishing company; we will be a true cultural institution- positively affecting and enhancing our society. That is, in my view, the most important contribution of all."

Bertelsmann's European and international printing activities, in the Be Printers division, recorded declining revenues (down 25.5% to €742m in 2015), with operating EBITDA down 26.6% to €47m.