The decline in sales of Stieg Larsson and the success of Fifty Shades of Grey has impacted on the revenue and profits of Quercus as the publisher released its interim results for the first half of the year. Pretax profit fell from £3.4m in the first half of 2011 to £600,000 this year, while turnover also shrank from £11.96m to £9.2m.
The report said that the company had predicted a trend of decline in sales of Larsson's Millennium trilogy, and noted that in the first half of the year: "The Larsson trilogy's decline accelerated, due predominantly to the unprecedented success of E L James' 50 Shades of Grey series. Additionally, royalty receipts from North America were adversely affected as various editions were rested to build demand for the film tie-in editions. This has resulted in a contribution from Larsson in the first half that fell short of our expectations and we believe that this pattern will continue for the remainder of the year."
However, the publisher said it expected Larsson's series would reduce to a long-term annuity level. Digital sales now take up over a quarter of the publishers's total revenues, rising from 10.5% in the first half of 2011 to 25.6%. Digital revenue as a whole was up 88%, leaping from £1.26m to £2.37m.
Chief executive Mark Smith said: "These results largely reflect the expected effects of the strategic transition which Quercus embarked upon over a year ago, as we set out to reinvest the short-term boost to profits from our highly successful Stieg Larsson franchise in order to build a broad and robust long-term business. The investments we are making in hiring key publishers, in bidding more competitively for publishing rights, and in building our infrastructure, inevitably are impacting our short-term financial performance, while the external trading environment also remains challenging.”
He added: “Nevertheless, the board remains confident that our strategy is the right one for all of Quercus' stakeholders and we look forward to starting to reap the benefits during 2013 and thereafter. This confidence in the future was underlined by the board's decision to increase the dividend paid in respect of the year ended 31 December 2011 by 5%."
Motor manuals publisher Haynes blamed Fifty Shades for its 'first quarter' results, with UK and European revenue down 10% down on last year. It said: "In the UK, a continuation of the weaker ordering from a small number of important retailers coupled with the very poor weather contributed to a 12% reduction in sales of our core printed automotive manuals, while sales of our non-automotive tiles ended the first quarter 21% down on the prior year. There is little doubt that during the period retail purchasing budgets were tight and that much of those available budgets went towards the phenomenally successful Fifty Shades series."