Bonnier Books UK outlines its plans for growth as it heads towards profitability

Bonnier Books UK hopes to return to profit this year after its operational losses fell by 76%, from £15m to £3.6m, in 2018—although it required a full recapitalisation from its Swedish parent firm.

Figures released today show that, in 2017, the UK company underwent a balance sheet restructure, aligning with the wider group’s accounting policies, that saw write-downs of £19.7m related to author acquisitions. Coupled with an operating loss of £15m, that led to an Earnings Before Interest, Tax, and Amortisation (EBITA) loss of £34.7m.

But the operating loss was slashed in 2018, partly owing to a staff restructure that saw 60 people leave the firm and an exodus of managerial staff, with Zaffre imprint c.e.o. Mark Smith; Ben Dunn, m.d. of its Kings Road Publishing division; c.e.o. Richard Johnson; and chief operating officer Sharon Parker all exiting. The closure of an Igloo Books warehouse in Segensworth, Hampshire, has also provided savings. Both years also saw the UK operation’s Swedish parent company, Bonnier Books, bailing out the firm with recapitalisations of around £36m in 2017, and more than £15m in 2018.

However, results for the 12 months ending 31st December 2018 show group net revenue increased by 14.6%, from £62.4m to £71.5m. The company now expects to become profitable this year, with sales on track to grow again, and it could be self-sustaining by 2020.

That would represent a huge turnaround after a period when overheads from Johnson’s aggressive growth strategy, including a number of book acquisitions, outstripped the firm’s capacity. Under new chief executive officer Perminder Mann, the publisher is moving to a traditional model and focusing more on literary fiction and narrative non-fiction.

Mann told The Bookseller there was still ongoing work behind the scenes to align the business into a setup more like its sister companies in the Bonnier Books Group. Plans are also afoot to bring the 150 members of its Chelsea-based Kings Road Publishing and Marylebone-based Zaffre trade teams under one roof. The hunt is on for new office space, and the move could happen early next year. Mann said: "The staff have been committed and really focused on delivering fantastic books. That’s what this is all about, ultimately. We’re constantly appearing in the Sunday Times bestseller charts, for instance, across the board. I’m just so pleased for the staff: [that success has] just kept the team motivated and it shows you’re absolutely doing the right thing."

In the recent past, Bonnier splurged huge amounts on big-money deals for veterans Wilbur Smith and Lynda La Plante. While it hasn’t ruled out similar acquisitions again, the publisher said it was taking a "more considered" approach, being strict on what made lists such as Zaffre’s tight 60 titles per year. "It’s a lot more thought-through, I would say. It’s the potential. It’s about brands," said Mann. "But we will still acquire a big book, if it is the right one at the right time."

Making it smark
The Tattooist of Auschwitz by Heather Morris was a runaway hit in 2018, shifting 370,000 copies through the TCM, and the company has high hopes for its sequel, Cilka’s Journey, due in October. Other forthcoming titles include comic duo Bob Mortimer and Paul Whitehouse’s Gone Fishing (in May), which is expected to perform strongly in the Father’s Day and Christmas markets after their TV show’s success.

Mann said: "We should celebrate the success of The Tattooist of Auschwitz because that’s what publishing’s all about—you wait for that breakthrough. But at the same time, if you put that aside and look at the core business, it’s in fantastic shape. A big moment for me was [in one weekly chart] last year when two of the top four [fiction] début books came from Zaffre—the Anton du Beke book [One Enchanted Evening] and The Tattooist..."

She claimed Bonnier has become a "destination to establish début authors" such as Morris, and said it avoided putting them on a "conveyor belt". Mann said: "It’s a journey. It’s not about the first two weeks—it’s the long-term journey of establishing a brand." There are plans for a new literary fiction imprint later this year while, in Northampton, mass-market publisher Igloo is also said to be "in really good shape", and Mann vowed it would not be left behind by the transformation.

Despite the need for cash injections from its parent firm since 2017, chairman Jim Zetterlund—first parachuted in last year as interim c.e.o. to fill the void after Johnson’s departure—said selling off the UK operation was "never an option" for the Swedes. "We want to be here in the UK," he said. "It’s one of the most exciting book markets in the world, Where would we be otherwise?

"We definitely want to be one of the top players in the UK, [whether] that takes 10 years or five years," he added. "But talking about size is not that important right now. It’s much better that we have a quality business, that we’re growing, profitably, over a period of time. That’s the most important thing."

Mann said: "We’ve got the right people on board, we’ve got a great team in place in both businesses, we’ve got some fantastic authors, some great books. It’s all to play for, I think.

"We get some great referrals from agents, the testimonials that are going out are so heartwarming. They actually enjoy the experience of working with our team. The challenge is to maintain that bespoke service, the journey they experience with us, while we grow. That’s our challenge, but we’re certainly ready to embrace that."