Dorling price slides after profits warning: MD departs as analysts downgrade forecasts

Click to follow
DORLING Kindersley, the book publisher, lost 20 per cent of its market value yesterday when it issued a profit warning and announced the departure of its managing director, Richard Harman.

Problems centre on Tiptree, a subsidiary of US publisher Random House which Dorling uses to distribute books in Britain. Dorling said Tiptree had run into trouble commissioning a new automated sorting system. It has severed the contract with Tiptree where it delivered books for door-to-door sale, though Tiptree remains employed for distribution to retail outlets.

The company has also encountered difficulties breaking into the market for educational books in North America. It said yesterday: 'The problems are continuing and cannot yet be finally quantified.'

However, Dorling said profits for the 12 months to next June would be less than the pounds 9.65m achieved last year. Ten days ago the Independent recommended that Dorling shares be avoided. Yesterday analysts reduced profit forecasts from about pounds 11.5m to about pounds 8.5m.

The shares fell from 310p to 251p yesterday. On revised earnings per share estimates, the stock is trading on a p/e of 29.

Rod Hare, a 33-year-old Australian described by Dorling as a 'hands-on manager and problem-solver', moves up from the post of chief operating officer to replace Mr Harman.

Mr Harman had a three-year rolling contract and was paid pounds 100,000 a year. Finance director Peter Gill said: 'He will get a relatively modest cash settlement of less than a year's salary.' Mr Harman keeps share options which, at yesterday's closing price, were worth pounds 1.5m.

(Photograph omitted)