Potter publisher's profit plummets
Harry Potter books sit on display as a customer browses in a bookshop in Berlin. Adam Berry/Bloomberg News |
Bloomsbury's reliance on J.K. Rowling's smash children's book series was underscored yesterday when the company posted a big, though expected, fall in 2006 annual profits a year of no major new Harry Potter releases.
The company is interested in businesses that complement its existing activities and also broaden its involvement in media.
"We have made 10 already and we are looking for further and bigger acquisitions that complete our core strengths in either adults, childrens' or reference publishing," said Bloomsbury Chairman Nigel Newton.
Any deals would most likely occur in the company's core markets of the UK, Germany and the United States, he added, with funding depending on the nature and size of the businesses involved.
Bloomsbury's pretax profit in the year to end-December fell to 5.2 million pounds from 20.1 million a year ago while group turnover dropped 31.5 percent to 74.8 million pounds from 109.1 million.
Analysts on average had been forecasting a pretax profit of 5.44 million pounds and revenue of 79 million pounds, according to a Reuters Estimates poll of seven analysts.
Bloomsbury said it had a strong balance sheet with net cash of 24.3 million pounds.
Bloomsbury said it had seen a good start to the current year with a strong pipeline of new books by Khaled Hosseini, author of The Kite Runner, and Rowling's Harry Potter and the Deathly Hallows the final book in the series.
Bloomsbury authors with new books on the way include Michael Ondaatje, Joanna Trollope, Celia Rees and Anthony Bourdain.
The December warning, which has left shares in the company trailing the FTSE Media Index by around 30 percent over the past three months was due to tough pre-Christmas trading, the company not completing budgeted reference rights sales by the year-end and the sharp fall in revenue.
"The latter was also influenced by the absence of a Harry Potter paperback title," said Altium Securities analyst Roddy Davidson.
Growth prospects
He added that Bloomsbury's medium-term growth prospects after an anticipated Potter-related spike during the coming year "will prove pedestrian without acquisitions".
Numis Securities analysts said Bloomsbury's 2007 performance should be much improved given the July 21 release of the next and last Potter book.
"However, the December update highlighted the inherent risks associated with book publishing," Numis said.
Shares in the company were up 1.3 percent at 194 pence in early trading.
Bloomsbury, which celebrates its 21st anniversary in September, said dynamics in publishing were changing at a time when its margins were being crimped by pricing pressure from retailers as well as pressure from authors' agents for advances.
Newton said this was fuelling the company's drive to get more out of its existing publishing assets and find new talent while focusing more aggressively on Web-based initiatives.
These included further digitising publishing assets to make them available through Web-based searches as a potential sales boost, making opening chapters on certain books free via the Internet and creating literature-community websites, he said.
In the reference segment, Bloomsbury has more than 200 titles available in an e-book format. Increasing this figure and selling to libraries around the world should boost revenue "substantially", the company said.
The company's final dividend was held at 3 pence, while the full-year payout was raised to 3.66 pence from 3.60 pence.
Agencies
(China Daily 04/04/2007 page16)
