Penguin Random House CEO Markus Dohle comments on half-yearly financial results
Following on from today's Bertelsmann announcement of their half-yearly results, Penguin Random House CEO Markus Dohle today sent a letter to all employees, reflecting on Penguin Random House's own performance.
Dear Penguin Random House Colleagues,
With Bertelsmann reporting our midyear fiscal results today, I would like take this opportunity, before we begin our biggest sales season tomorrow, to review with you our financial performance for the first half of 2016. These past eight months have been an unusual time, full of ups and downs around the world and in our industry. While Penguin Random House continues to be profitable, and a major contributor to both our shareholders’ overall profitability, our operating revenue and profits for the reporting period declined from the 2015 half-year. I want you to understand some of the reasons why.
Notwithstanding our numerous outstanding publishing achievements during the first six months of 2016, our results reflect the absence of newly published megasellers like those of the first half of 2015, when sales of THE GIRL ON THE TRAIN and GREY were key drivers for our revenue. Happily, however, our 2016 results so far have benefited from the continuing large multiterritorial sales of Paula Hawkins’s novel and THE LIFE-CHANGING MAGIC OF TIDYING UP, as well as from the Jojo Moyes and Dr. Seuss backlists, and also from the breakout launches of WHEN BREATH BECOMES AIR and JOY, among others. The heart of our business performance is—and will always be—the excellence and strength of our publishing.
Much has been said about the new digital terms of sale and their impact on sales performance. As anticipated, our ebook revenues were lower year-on-year. But our overall digital sales—which now include a significant upswing in audiobook downloads—are on a positive path forward.
What’s also gratifying is the strength and stability of our physical book sales. You will recall that we never bought in to the gloom and doom about the future of print. Instead we said that print would always be important, even as digital became more so. We made significant improvements in both, and the care we’ve taken with our physical supply chains, operations, and distribution centers is especially paying off now as consumer demand for physical remains robust.
Additionally, we continue to see the benefits of the merger. In fact, the savings we are realizing from our now completed post-merger operational integrations, together with our sales results, enabled us to maintain an outstanding 12% profitability. This reflects the underlying health of our publishing and the long-term viability of our business model.
As ever, we remain squarely focused on the growth of our core business. With the integration behind us, we can increasingly enhance our emphasis on our readers, setting new priorities and putting our plans into action. Our initiatives include developing new approaches to driving discovery online for our books and deploying new technologies across all marketing channels—social, email, web, and print campaigns—to reach and influence more readers than ever before. Together, we will work to stay ahead of changes in readers’ behavior and continue to connect them with the best reads by applying traditional as well as new marketing technologies, partnerships, and platforms.
What can we expect for this year’s second half? We’ve had a good start, thanks to our July numbers. Looking ahead to the Fall title lineup, we have at least one potential hardcover, paperback, ebook, or audio bestseller going on sale every week through December. There is so much to look forward to.
Already, 2016 has been a year unlike any other, and there are many unknowns still to be faced: What will be the future effects of Brexit? Will our hopes for recovery happen for some challenged Latin American local economies? What will be the results of the unprecedented U.S. presidential election? As publishers, we are no strangers to uncertainty. On the contrary, an ever-changing market landscape is what we know how to navigate steadily. This is why I am optimistic we will finish the year with another consistent, solid performance—creatively and fiscally.
In this volatile, unpredictable world, our books can and do make a meaningful difference, and everything you do supports our larger purpose to create the future of books and long-form reading for generations to come. I thank you for your daily commitment to achieve that goal.