PRH first half sales down but core business remains 'strong'

PRH first half sales down but core business remains 'strong'

Penguin Random House (PRH) has recorded a decline in sales and earnings for the first six months of 2018, owing to exchange rate effects, according to Bertelsmann's first-half operating results posted this morning (30th August).

PRH c.e.o. Markus Dohle said that despite the downturn PRH's core business remained "very strong globally".

In an email circulated to staff, he said that although the publisher's headline numbers were down in euros, the underlying operating revenue and profit in US dollars had been "stable" year on year. "This means that the quality of our business and our earnings have been on the same—high—level as in the prior year," the PRH chief said.

Revenues came in at €1.48bn, 3.3% down from just over €1.53bn in the first half of the prior year. Operating EBITDA meanwhile fell by 17% to €171m in comparison to €206m a year earlier.

PRH's parent company Bertelsmann reported "strong growth" in audio formats and Dohle said PRH's audio-publishing business was up in double-digital percentages in "most of our territories". 

Bertelsmann also celebrated the firm's "numerous bestsellers". The biggest hitters for the period included Bill Clinton and James Patterson's The President Is Missing, 12 Rules for Life by Jordan B. Peterson and Ernest Cline's novel Ready Player One, the success of which was "offset mainly by negative exchange rate effects", said Bertelsmann.

In the United Kingdom, it was reported that 41% of all books on the Sunday Times bestseller lists came from PRH's stables. On top of those already mentioned, Sapiens by Yuval Noah Harari and Still Me by Jojo Moyes were singled out for having sold "particularly well" in the UK.

With the progressive integration of the Ediciones B publishing group, Penguin Random House Grupo Editorial garnered higher revenues showing growth across print and audio, according to Bertelsmann. This compensated for countervailing effects arising from difficult conditions in some Latin American markets, it said.

Looking back on 2018 so far, Dohle highlighted PRH's expansion internationally with the acquisitions of nonfiction wellness publisher Rodale Books in the States and Hindi-langauge paperback publisher Hind Pocket Books in India. The latter he said was "backlist rich" and expanded PRH's local-language publishing program. He also drew attention to the launch of several new imprints: Kokila at Penguin Young Readers and Random House Graphic at Random House Children’s Books in the US, Strange Light in Canada, Penguin Petit in India, and Selecta from Grupo Editorial.

Updating staff on large investments being made to PRH's supply chain, Dohle said UK and Australia's distribution-centre investments and projects were "(almost) finished". In April it also opened a new building in the US to expand the capacity of its facility in Westminster, Maryland. These will help PRH to "enhance the efficiency and profitability of our booksellers—and of our own company", he said.

After working on the expansion of its direct-to-reader relationships, Dohle added: "Millions of readers are newly enjoying direct relationships with us, thanks to the data-driven consumer insights and relationships we are developing to market our books directly and at scale."

He continued: "In this year of ongoing unrest and anxiety worldwide, our authors’ books across categories are needed more than ever. And your work here to publish them is more vital than ever. We are clear-eyed about our current and future challenges, and we have a clearly-shaped strategy to meet those challenges. That’s why I remain optimistic about the immediate and long-term future of book publishing and the position we have created together in our core businesses around the world. Commitment to the highest quality of our books and services is what has and always will drive us—and what continues to be the foundation for our successful and meaningful publishing at Penguin Random House globally."