US Edition Bloomsbury Publishing
161½p-3½
Questor says BUY
THE largest listed independent publisher Bloomsbury reported “spectacular” sales of cookbooks and best-sellers, but rising costs meant full-year, pre-tax profits were lower in annual results yesterday.
The Harry Potter publisher revealed an 11pc increase in revenue to £109.5m. Sales of cookbooks such as Tom Kerridge’s Proper Pub Food were strong. The book company also had a run of best-sellers including The Kite Runner author Khaled Hosseini’s And The Mountains Echoed and Samantha Shannon’s The Bone Season.
Sales of adult books were £6.6m higher at £49.9m, helped by 26pc growth of digital versions, and profits jumped by £1.7m to £5.4m.
Bloomsbury’s academic books, such as tax and law tomes targeted at professionals, now make up 29pc of the group’s annual revenue. However, constrained library budgets and a competitive market resulted in profits slipping to £4.5m, from £5.1m a year earlier.
The children’s books division increased revenue to £23.6m, from £21.3m, and pre-tax profits almost doubled to £2m, from £1.1m a year earlier.
However, the strong increase in sales was undone by rising costs. So, while total group revenue increased by 11pc, the company’s costs were up by 14pc and marketing and distribution was 17pc higher than a year earlier. This translated into a more muted 5pc increase in operating profits.
One-off costs related to acquisitions and restructuring costs more than doubled to £765,000 from £337,000 last year.
All this led to a somewhat disappointing full-year, pre-tax profit performance. The shares edged 2.1pc lower yesterday and are now down 5pc from our initial recommendation (Buy, 171¾p, October 30).
Nigel Newton, chief executive, said the company was “firing on all cylinders” and analysts forecast pre-tax profits up to £12.8m on largely flat revenues, giving earnings per share of 13.2p.
The shares, trading on 12 times earnings, remain fairly priced, so Questor retains a buy recommendation.