PRH first-half revenue hit by e-book decline

Global revenues at Penguin Random House fell 10.7% year-on-year in the first half of 2016 due to lower e-book sales.

Bertelsmann, which owns 53% of Penguin Random House, has filed its results for the first half of the year, revealing that PRH’s revenues declined 10.7% year-on-year to €1.5bn (£1.27bn), down from €1.7bn (£1.44bn) in 2016. "An expected decline in e-book sales in the United States and UK due in part to new retail sales terms" was a factor in the fall; however, according to the company, the financial impact was partly offset by "steady" physical book sales, and growth in the audio format.

Half-year figures recently released by Pearson showed Penguin Random House worldwide grew profit during the period (to £32m, up from £24m).

Nielsen Bookscan's TCM figures for the first 26 weeks of 2016 put PRH UK’s sales at £144.3m, a 6.7% rise versus the same period in 2015. That was below the overall print market rise of 9.3%. PRH retained its market share at 22.4% of all UK print book sales. PRH UK gave its first half 2016 digital volume figures were put at just under 5.9 million e-books sold, a drop of 16.7% year on year.

Hachette recently also reported first-half revenues hit by an e-book decline.

According to the Bertelsmann filing, savings from the now-completed integration of Penguin and Random House contributed "significantly" to operating earnings before interest, tax, depreciation and amortisation (EBITDA), which was down by 10.6% to €185m (£156.83m). Titles highlighted as successful in the UK included Paula Hawkins’ The Girl on the Train, Jojo Moyes’ Me Before You and After You, Bill Bryson’s The Road to Little Dribbling and Roald Dahl’s The BFG.

Meanwhile at Bertelsmann as a whole, EBITDA from continuing operations rose to €1.11bn (£0.94bn) in the first six months of the year from €1.06bn (£0.9bn) in the same period last year. Group profit rose by 21.1% to €482m (£408.61m) due in part to the improved operating result and revenues in the first six months of the current year amounted to €8.0bn (£6.78bn).       

Thomas Rabe, chairman and c.e.o. of Bertelsmann, said: “We are very pleased with the positive development of the first six months of the year, in which all of the divisions played their part. The best operating result in Bertelsmann's history, the high profitability of our businesses, and significantly improved Group profit of nearly a half billion euros give us confidence for the full year.

“We recognize that our growth profile has further improved through a series of strategic measures; our new Group structure with eight divisions introduced at the beginning of the year makes this transparent. At the same time, we have become more digital and more international – we will continue on this path in the second half of the year.”