With sales rising 4.8% but earnings dropping 11.8%, Penguin Random House CEO Nihar Malaviya said the giant publisher's various business had "mixed performances" in 2022, adding that "unfortunately, we collectively fell short of our financial targets." According to PRH parent company Bertelsmann, revenue at PRH was €4.22 billion (about $4.6 billion at current exchange rates), up from €4.03 billion in 2021, but EBIT (earnings before interest and taxes) fell to €666 million, from €755 million.
The U.S. accounted for 57% of total PRH sales, about $2.41 billion at current exchange rates. Bertelsmann said that the publishing business in the U.S. "reflected the normalization of demand following the strong sales of the pandemic years, as well as the challenges posed by inflation and supply-chain pressures." Michelle Obama’s The Light We Carry sold more than 1.8 million copies worldwide, across all formats, by the end of the year, and a number of Dr. Seuss titles sold more than nine million copies collectively.
In his first annual letter to employees since taking over for Markus Dohle at the beginning of the year, Malaviya pointed to rising costs as the main factor in the drop in profits, writing that "cost pressures persist across the board as does uneven retail demand." Among the bright spots last year, Malaviya identified "continued growth of audiobooks globally, and reduction in return rates driven." Malaviya assured employees that PRH and Bertelsmann, "will continue to empower you with investments that support your work: book ideas and manuscripts that our publishers and editors champion, as well as advancing our capabilities in many areas, such as sales, marketing, metadata management, and supply chain, among others."
Malaviya wrote that the company has gotten off to a good start in 2023, led by sales of Prince Harry’s Spare, "as well as perennial bestsellers and exciting recent publications across our adult and children’s lists." Like many other executives in the industry, he noted that, while book sales have fallen from the highs achieved during Covid, sales remain higher than in pre-pandemic times in most of the markets where PRH operates. "The cost pressures still remain, but we, at PRH, have evolved with all the changes in the marketplace over the years—and I have no doubt that with all of your support, we will succeed by being creative, resourceful, and entrepreneurial," Malaviya wrote.
Malaviya didn't address the failed acquisition of Simon & Schuster, but did allude to the change in leadership, which, in addition to his appointment, included the departures of PRH US CEO and Madeline McIntosh and Random House Publishing Group head Gina Centrello as well as the creation of a new leadership team. "One of my highlights of the year so far has been the chance to connect with many of you," he wrote. "It’s been so valuable to hear your perspectives about our industry and the way we work. Our dialogue is evidence of our shared enthusiasm and care for our company, and our authors and their books. I learn something during all of our interactions, so please keep reaching out to me."
Malaviya was a first-time attendee at the Bologna Children’s Book Fair this year—a trip, he wrote, that "reaffirmed to me that we as publishers have the unique opportunity to connect readers with stories from other cultures and experiences, and in doing so play a key role in building more empathy for others in an increasingly divided world."
