But the profits, up 16 per cent to pounds 6.6m, were still below the 1995 figure of pounds 8.16m.
Hodder said that lower selling prices had increased sales volumes, especially through multiple retailers and supermarkets, while sales of hardback best- sellers had doubled since the Net Book Agreement ended.
"We concentrated on developing and marketing high quality publishing lists in a framework of tight management control," chief executive Tim Hely Hutchinson said. Low-margin overseas agency business has been discontinued and replaced by long-term copyrights from the best authors.
Turnover was up 5 per cent to pounds 92.8m, or 9 per cent on a like-for-like basis before the impact of exchange rates and the loss of low-margin business overseas.
UK consumer publishing made less money on higher turnover, but profits from the educational and academic division rose 20 per cent and overseas operations were more profitable. Losses at the distribution business were reduced.
A rise in the tax charge from 20 per cent to 30 per cent meant earnings per share were only 2 per cent higher at 13.3p. The dividend was unchanged at 6.5p.
Likely best-sellers for 1997 include Stephen King's new novel, Wizard and Glass, Dean Koontz's new three-book series and the paperback version of John le Carre's The Tailor of Panama.
Sales to book clubs and libraries declined in the first half of 1996, and have not yet shown much recovery.
Educational book sales are also sluggish and retailers are keeping stocks of these books low. But Hodder said that trading had been encouraging in the first two months of 1997.
Hodder Headline's shares, which were as high as 408p three years ago, closed 2.5p better at 218.5p.