Hachette UK optimistic despite 'challenging' year

Shares in Hachette’s parent company Lagardere have fallen by 8.2% this morning after it announced a lower-than-expected profit forecast and the departure of its chief financial officer.

Lagardere reported that recurring earnings before interest and tax this year would increase slightly above 10%, equating to €400m, when an analyst at Barclays PLC had estimated a €420m profit forecast, according to Bloomberg, which triggered the share price fall this morning.

The share price was also affected by the departure of Lagadere’s chief financial officer Dominique D’Hinnin, which the Financial Times said “raises questions about the future strategy of the French media group.” D'Hinnin left "to pursue other opportunities outside the group,” Lagadere said.

In its full year results released last night (9th March), Lagardere’s publishing division’s operating margin fell by 0.8% to 9.0%, and total sales reached €2,206m, up 10.1% or 1.7% like-for-like. Profits rose slightly by €1m to €198m.

Of its profit results, Lagadere said: “This  performance  was  attributable  to  three  factors:  lower  sales  of  e -books  in  the  United States,  the  VAT hike  in  the  United  Kingdom,  and  a  decline  in  the  Education  segment  in France  (in  a  year preceding  curriculum changes).”

It added: “These  factors  were  partly  offset  by  positive  momentum  in  France  in  general  literature  and  illustrated  books,  while  sales  of Partworks held up well.”

Lagardere did not break out Hachette UK results. However, Tim Hely Hutchinson, c.e.o of Hachette UK, said 2015 had produced “a number of challenges, including the imposition of VAT on e-books at the full rate and new e-book trading terms with key customers”.  

“Despite these headwinds, and allowing for an expensive move from four different locations to our magnificent new building in central London, Hachette UK had a very profitable year, comfortably exceeding our budgets thanks to brilliant publishing across the group and in particular to contributions in illustrated publishing from Octopus, a spectacular year from education, including Rising Stars, and significant contributions from the other five companies we acquired in 2014 and 2015,” he said.

He added: "2016 has got off to a flying start with a number of bestsellers including Deliciously Ella Everyday, Simon Sebag Montefiore’s magnificent book on The Romanovs and the announcement of the publication of Harry Potter and The Cursed Child in July.”

Across the wider group, sales rose to €7,193m, up 0.3% on a reported basis and up 3.0% like-for-like, and group ebit was €378m, up €36m (10.5%) on 2014. At end-December 2015, net debt stood at €1,551m, compared with €954m at the end of the previous year.