Operating results from four of the nation's major book printers for the third quarter ended September 30, 2001, reflect a soft demand for books, although the decline in the book business was not as dramatic as in many other print segments.

Revenues from book publishing services at R.R. Donnelley were down less than 1% in the quarter, to $199.5 million, compared to a 13.4% drop in revenues for all of Donnelley's commercial print business. Book manufacturing revenues fell 6.1% at Courier Corp. in the period, to $47.6 million, as a 25% increase in sales to the religion market was offset by a 14% decline in specialty trade revenues and a 5% decline in education sales. Total revenues at Quebecor fell about 2% in the quarter, although executives said its book printing segment was not as negatively affected by the economic slowdown as other segments. Marc Reisch, president of Quebecor World North America, said that, after a slow first half of the year, book business had picked up in the third quarter, although the events of September 11 will prevent book printing revenues from meeting original targets. In remarks echoed by other executives, Reisch noted that publishers continue to focus on shorter prints runs than in the past. Revenues in Banta Corp.'s printing and digital imaging segment fell 8.1% in the period, to $272.2 million. The company reported that educational book printing strengthened in the third quarter, following a slower-than-expected first six months of the year as excess inventories had reduced demand.

Both Donnelley and Quebecor announced companywide restructuring programs that will cut the total workforce at the printers by 7% and 6%, respectively. And all four printers said they are being cautious in investing in new equipment. Capital expenditures at Courier, for example, are expected to be about $9 million in its current fiscal year, compared to $13 million in the fiscal year ended September 30, 2001, and Donnelley said it anticipates that capital expenditures will be significantly below previous projections.

Good Year at Courier

Despite the 6.1% decline in fourth-quarter book manufacturing revenues and a 4.0% drop, to $181.2 million, in manufacturing for the full year, total revenues at Courier rose 10.2% to $211.9 million. Net income in the year, helped by onetime gains related to the sale of its home school unit and some real estate, increased 24.5% to $13.2 million. The biggest boost to revenues came from Dover Publications, which had sales of $33.3 million; Courier acquired Dover more than a year ago (News, Aug. 21, 2000). Dover performed well above expectations, bettering original estimates of a break-even year by posting operating earnings of $1.4 million. Courier chairman Jim Conway credited a revitalized sales force, expanded list and upgraded infrastructure with delivering the strong results. Highlights in the year included a 40% increase in direct-to-consumer sales as a result of Dover's online store, and savings of $500,000 due to the consolidation of several in-house functions.

Backlist sales accounted for approximately 80% of Dover's revenues in fiscal 2001. Conway said the company plans to increase its frontlist output by about 10% to 15% in the current year and estimated Dover could release as many as 500 titles this year. Sales in fiscal 2002 are projected to increase between 12% and 15%, with pretax income doubling.

Courier's book manufacturing performance in the year reflected an 8.5% increase in sales to the religion market, a 5% gain in sales to the education sector and a 17% decline in sales to the specialty trade market. Among the weaker trade categories were computer and business books, although the company has started to see an increase in demand for computer game books. In education, the elhi segment had a strong year, but sales to the college sector fell sharply in the fourth quarter and were down 2% for the year. Excess inventory, due in part to the bankruptcies of several college e-retailers, was a major factor in the soft college market. Executives projected that the manufacturing segment will have low single-digit growth in sales and earnings in fiscal 2002, with sales improving in the second half of the year following a slow start.