Bloomsbury seeks new magic as Potter spell ends
Wednesday 02 April 2008
Harry Potter weaved his final spell for Bloomsbury Publishing yesterday, conjuring up doubled revenues and tripled pre-tax profits in the group's full-year 2007 financial results.
But with the magic at an end, Bloomsbury is looking to its rather drier specialist businesses to maintain progress. And although Investec maintained its "buy" note on the group's shares yesterday, the bank noted that 2008 will be key to re-establishing its growth credentials. The stock closed down 0.45 per cent at 164.3p.
The company cited strong performances from a number of its writers – including Khaled Hosseini, Will-iam Boyd and Hugh Fearnley-Whittingstall – in the forecast-beating figures that showed revenue for 2007 at £150.2m, compared with £74.8m in 2006, and pre-tax profit at £17.8m compared with £5.2m. Diluted earnings per share were also up, by 219 per cent to 15.6p, while net cash almost doubled to £47.6m.
But JK Rowling's boy wizard was by far the stellar performer. Harry Potter and the Deathly Hallows, the seventh and final instalment in the series, clocked up UK sales of 2,652,656 in the first day alone and contributed the bulk of the children's division's 261 per cent revenue growth and 200 per cent gross profit growth, to £98.9m and £39.6m respectively. Revenues from adult publishing were up a more modest 9.7 per cent to £35.9m.
The book's popularity was also central to the success of Bloomsbury's German division. Berlin Verlag has sold more than a million copies, despite it being available only in English, helping push revenues up 45.1 per cent to £8.63m.
With the series concluded, the publisher must look elsewhere, as a profit warning in 2006 – a non-Potter year – emphasised.
The group is keen to emphasise non-wizardly successes. Khaled Hosseini's The Kite Runner and A Thousand Splendid Suns have done well, and the non-fiction Don'ts for Husbands and Don'ts for Wives, written in 1913, sold nearly half a million copies.
"Our success has been driven by a number of bestsellers across the group," Nigel Newton, the founder and chief executive of Bloomsbury, said.
There are new books in the pipeline from bestselling authors including David Guterson and Margaret Atwood. And Jonathan Littell's Die Wohlgesonnen has sparked controversy, and received considerable publicity, since its publication in Germany last month.
Relying on existing consumer strength will not be enough. A strategic review has already made savings of £1.75m and identified a further £780,000. And the firm's specialist divisions will be crucial.
"We are seeking to maintain our strong position in consumer trade publishing whilst expanding organically and through acquisition our specialist publishing in the educational, academic and reference fields," Mr Newton said.
The strategy is in evidence. This week, the company completed the acquisition of Featherstone Education, a market-leading schools publisher focusing on children up to seven years old. It is participating in Microsoft's "Live Search" programme so that Bloomsbury books' content can be searched for over the internet. And it signed a deal with the Qatar Financial Centre Authority in August to create a financial encyclopaedia.
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