PRH sees 'strong growth' in first half of 2015

PRH sees 'strong growth' in first half of 2015

Strong revenue growth by Penguin Random House (PRH) in the first half of 2015 helped its parent company Bertelsmann to achieve its highest revenues since 2007.

Meanwhile, Bertelsmann's chief executive Thomas Rabe has told Reuters the company could "imagine" raising its stake in Penguin Random House, but said the decision was up to co-owner Pearson.

PRH’s half-yearly success was “driven by numerous bestsellers as well as positive currency effects”, with the book publishing business in the US particularly recording improved results.

Bertelsmann owns a 53% stake in PRH (Pearson the other 47%), and including Verlagsgruppe Random House in Germany, which is wholly owned by Bertelsmann, book publishing revenues were €1.7bn (£1.25bn), up from $1.5bn (£1.11bn) year-on-year. Operating EBITDA was €207m (£152.58m), an increase of 30.2% over the previous year’s €159m (£117.2m).

The year’s bestselling title so far from Penguin Random House is Paula Hawkins’ debut novel The Girl on the Train (Doubleday), which has sold 4.5m copies worldwide according to Penguin Random House.

In the UK bestseller also included To Kill a Mockingbird by Harper Lee (Arrow) and Diary of a Wimpy Kid: The Long Haul by Jeff Kinney (Puffin). In the US, top selling titles also included Paper Towns by John Green and books by Dr Seuss and B J Novak.

At Penguin Random House Grupo Editorial, an “excellent performance in Latin America and double-digit growth in e-book sales more than offset the ongoing challenges in the Spanish book market," the company said.

Other highlights for the first half of the year include E L James’ Grey (Arrow), which surpassed 3.5m print, audio and e-book copies sold in the US and UK in its first two publication weeks, and the launch of Penguin Classics in Spain and Latin America as Penguin Clasicos.

In a letter to staff, Penguin Random House c.e.o. Markus Dohle, said: “As Penguin Random House, we know that we have the resources to continually deepen our impact through the breadth of our publishing expertise, our industry-leading support of customers, the strength and variety of our author talent, and an expanded global reach.

“But even with those tools and high hopes, in my most optimistic moments I could not have foreseen the publishing successes we have been enjoying this year.

“As you well know, this industry is unpredictable: Migrating release dates, unexpected title additions, shifting marketplace trends, and vacillating consumer preferences are among the complexities we regularly face. What we can consistently rely on, though, are our teams around the world. You transform that unpredictability into potential.”

He continued: “In publishing we know from experience that there is no foolproof formula for guaranteeing or even sustaining big bestsellers. However, with all of you coming together to create a community of creativity and teamwork to serve our authors and to maximise their reach over the long term, I know we can continue to have a huge impact in this world. And that is the best result we could ever hope for.”

Results for the first six months of the year show that overall Bertelsmann revenues grew by 2.5% year-on-year, from €7.8bn (£5.73bn) to €8.0bn (£5.88bn). Operating EBITDA was just under €1.1bn (£0.81bn), a new record high.

Thomas Rabe, chairman and c.e.o. of Bertelsmann, said: “We are very satisfied with the development of the past months. Our revenues are the highest they have been since 2007, and the operating result is the best in Bertelsmann’s history. This signifies how well we are progressing in making Bertelsmann a faster-growing, more digital and more international company. In the first half of 2015, we achieved further progress toward these goals; our education business has already taken clear shape. Our highly profitable core businesses form a strong foundation from which we are expanding into new growth areas. We will continue to invest in the months ahead to move forward on our path to becoming a ‘New Bertelsmann’.”

He has also told Reuters that Bertelsmann would consider raising its stake in PRH. He said: "Publishing has always been at the heart of Bertelsmann and it always will be. We could imagine raising our stake in Penguin Random house in steps."

He added: "It is up to Pearson whether they want to sell or not."

The Pearson stake in Penguin Random House could be worth about €2.5bn ($2.8 billion), based on comparable valuations of rivals, potential cost savings and negotiating power with retailers such as Amazon, Reuters estimated.

At 30th June, 2015, Bertelsmann employed 119,019 people worldwide.