E-book revenue drop hits Hachette UK's first half

Hachette UK's revenues for the first half of 2016 fell 4.7% like-for-like, due to "negative comparison effects" and falling e-book revenues, parent company Lagardere has reported.

The decline in e-book sales was attributed to the return to an agency contract model with distributors in July of last year. Falling e-book revenue was also a factor reported in a 6.7% revenue drop for the last quarter of 2015.

Hachette c.e.o. Tim Hely Hutchinson commented: "As predicted - and widely reported throughout the industry - terms changes and VAT at the full rate continue to impact on the sales of e-books, but our publishing programme is so strong, backed by inventive and creative publicity, sales and marketing campaigns, that all the divisions in Hachette UK ended the first half of the year in a very good position."

At Lagardere Publishing, which includes Hachette UK as well as other publishing divisions around the world, revenue was down 2% on a like-for-like basis, at €970m (2015: €968m), despite being up 3% on a consolidated basis, because of the falling value of the pound. The "negative foreign exchange effect" totalled €18m, but was offset by a "positive scope impact" of €22m.

Recurring EBIT at Lagardere Publishing is "stable" compared to 2015 at +€36m. The decline in e-book revenue in the UK was partly "offset" for Lagardere Publishing by "strong profitability gains" in the US attributable to "disciplined cost management", despite the US's own revenue decline of 6.6% caused by a "less intensive" release schedule to 2015's first half. "Robust earnings" from Partworks, which experienced revenue growth of 9% for the first half of 2016, also contributed.

E-books accounted for 9.2% of total Lagardere Publishing revenue in the first half of 2016 compared to 10.7% in the first half of 2015.

Hely Hutchinson drew attention, as part of a statement issued, to trade publishing highlights at Hachette such as its award-winning debuts at John Murray, The Loney and The Glorious Heresies, the launch of "boutique imprints" Fleet, Riverrun, Trapeze and Spring, its digital projects and the acquisition of mobile games company Neon Play.

In Children's Hely Hutchinson said the first half of the year had been focused on "acquisitions of new books and the appointment of new colleagues".

Of Hodder Education, awarded Educational Publisher of the Year at the British Book Industry Awards for a second year running, he said event acquisitions Rising Stars and ex-Pearson lists in the Caribbean and Singspore were making "hugely positive contributions, broadening our reach into primary education and into overseas markets".

Little, Brown is currently gearing up for publication of the Harry Potter and the Cursed Child play script, the presales for which has seen Waterstones predicting it to be the biggest book since the last Harry Potter title's release in 2007.