Shares in Hodder Headline, Britain's fifth-largest book publisher, rose 10p to 327p yesterday, on news of a 221 per cent rise in profits and an impressive turnaround at its subsidiary Hodder & Stoughton.
In the first full year since Headline, the middlebrow publisher, bought H&S, mainline publisher of best-selling authors such as John Le Carr, pre-tax profits rose to £8.2m, on turnover up 58 per cent to £80.6m.
"These results demonstrate the benefits of the policies we have implemented since the merger," Tim Hely Hutchinson, group chief executive, said.
Following the agreed takeover in 1993, Mr Hutchinson, founder of Headline and a much-admired editor and marketer, moved to cut costs and generate higher sales, largely through reductions in overhead and aggressive marketing of new titles. The company also folded H&S's distribution arm into Headline's Bookpoint, running up restructuring losses of about £300,000 last year.
It has set aside £300,000 against losses on stock bought but not paid for by Dillons, the chain owned by the failed Pentos retail group whose assets were bought by Thorn EMI earlier this month.
Mr Hutchinson said the final loss "would be less than the amount we set aside", following Thorn EMI's offer of 65p in the pound for Dillons' book inventory. Sales to Dillons have resumed.
The company left the Net Book Agreement last Boxing Day, allowing the retail prices of many of its books to fall dramatically. It believes it can earn more through the extra sales volume than by sticking to the minimum price guidelines under the booksellers' voluntary agreement. It is increasingly selling books through non-traditional outlets and retail chains where discounting is practised.
The company intends to publish about 2,600 titles this year, up from 1,700 last year, and to market its back list of Le Carr, Stephen King and other best-selling authors.
Its new audio books division is poised to grow by 150 new titles in 1995.
Two publishers bought last year may cost the company up to £3.1m if certain profit targets are met. Mr Hutchinson said there were no immediate plans for further expansion through acquisition.