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Profits Up Sharply On Random House On Slight Sales Decline

August 31, 2011
By Michael Cader

Bertelsmann reported sales for the first half of the year, and Random House’s results followed the pattern of other big houses in recent months: sales were basically flat (down 4 million euros) but profits rebounded significantly, up over 70 percent. Sales for the period were 787 million euros, with operating EBIT of 69 million euros. The sales slide was blamed on “unfavorable exchange-rate effects.” While sales are still below levels reached in 2007 (832 million euros) and 2006 (859 million euros), this year’s operating EBIT is the best first-half result in years.

The company “benefited from a strong U.S. performance despite insolvencies and ongoing consolidations in book retail,” which included almost 4 million units of George R.R. Martin’s fantasy series.

In the US, digital sales comprised over 20 percent of revenues. Random House Group UK ceo Gail Rebuck indicated in a letter to staff that her unit’s ebook sales are now more than 10 percent of sales, according to the Bookseller.

In a letter to employees, ceo Markus Dohle warns that “with our local economies showing increasing fragility in recent weeks, maintaining our first-half fiscal momentum won’t be easy,” though “we go into the fall with an exceptional publishing lineup.”

In closing, Dohle writes: “It is exciting and humbling to be part of one of the most important cultural and commercial shifts of our lifetimes: how our beloved books are being published, purchased, and read. I look forward to working with you to make the most of every opportunity during these transformative times.”

Overall, Bertelsmann’s report was mixed. Sales rose 1.9 percent and net profit rose, though operating profit declined. The company reduced their expectations for the year, now forecasting a small decline in operating profit.

In other financial news, Barnes & Noble stock was up again in today’s morning trading after gaining almost 15 percent yesterday on what the market saw as good news about the growth in their Nook business.

Filed Under: Earnings Reports, Free, Publishers

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