Coming off a soft first six months of 2003, Random House reported that sales for the first half of 2004 rose 9.3%, to 810 million euros ($980 million), while operating EBIT (earnings before interest and taxes) jumped 158%, to 31 million euros ($37.5 million).
Sales were up in all of Random's major markets, led by strong sales in the company's English-language markets. Results were particularly strong in the U.K. and Australia and were also up in the U.S. Sales in the U.S. were negatively affected by the weakness of the dollar compared to the euro.
In his letter to employees, Random chairman Peter Olson said gains in North America were due to new bestsellers, such as My Life, The Last Juror, The Sexy Years, Father Joe and Trump, as well as solid performances by a number of long-selling books, led by The Da Vinci Code (2.7 million copies printed in the first half of 2004; 8.6 million copies in total), Eragon and Oh, the Places You'll Go! Random placed 108 titles on the New York Times bestseller lists in the six-month period, with 13 reaching number 1; both figures are ahead of last year's pace. Olson cited "enormously effective collaborative effort among our publishing, sales and support teams" for posting gains in "an uneven marketplace."
Olson was cautious about predictions for the second half of 2004. He observed that "any real upturn at book retail in 2004 has been largely unsustained," and that "consumers were more frugal in their book purchases this summer than in the spring." Among the uncertainties facing the industry in the last part of the year are the presidential election, which could divert consumers' attention as well as make it more difficult to get media exposure for authors, Olson said.
In areas outside of North America, sales at the company's German subsidiary, Verlagsgruppe Random House, rose, but earnings were hurt by restructuring costs and the integration of Heyne. Random's start-up operations in Asia got off to a good start, Random parent company Bertelsmann said, especially in Korea.
Bertelsmann also reported that Bookspan "improved its result year on year." The nation's largest book club had a weak first half of 2003.
Cheetham Joins Up
Random also announced last week that Anthony Cheetham, who joined Random U.K. in 1989 following its purchase of Century Hutchinson and resigned in 1991, will rejoin the company in October as a part-time consultant. Cheetham will acquire books for Random's U.K. and U.S. units, reporting to Random U.K. chief executive Gail Rebuck and Knopf president Sonny Mehta.
In her letter to U.K. employees, Rebuck observed that while RHUK increased its market share to an industry-leading 14.4% from 12.9% in the first half of 2003, "some of our competitors are also growing." She pointed in particular to the Hachette Group, which recently acquired Hodder Headline. "If we are to maintain our position, we must capitalise on our strengths and continue to grow organically," Rebuck wrote.
