HarperCollins had a mixed third quarter ended March 31, 2022, with sales rising 5%, but profits falling 16% from a year ago, parent company News Corp reported.
Revenue rose to $515 million up from $490 million in the third quarter of fiscal 2021. The sales increase was due almost entirely to last spring’s acquisition of the Houghton Mifflin Harcourt trade group, which added $35 million to sales in the period. The contribution from HMH was offset by a $14 million decline in sales of the Bridgerton series, which benefitted last year from the debut of the Netflix series. Sales of children’s books also declined, as did sales of foreign-language books. E-book sales fell in the quarter, which News Corp also attributed to a drop in sales of Bridgerton titles, and while sales of downloadable audio rose, total digital sales fell 6%.
The 16% drop in EBIDTA (earnings before interest, depreciation, taxes, and amortization), to $67 million, News Corp CEO Robert Thomson said, was driven by higher manufacturing and freight costs, and ongoing supply chain and inflationary pressures. In addition, lower e-book sales, with their higher margins than print books, also negatively affected profits.
Thomson told analysts in a conference call that News Corp expects the disruptions currently impacting publishing to “abate over time.” Thomson noted that even as sales growth has slowed, he expects book sales to be “significantly higher” than before the pandemic. CFO Susan Panuccio pointed out that while earnings fell, book “consumption levels” remain higher than prior to the pandemic. Panuccio acknowledged, however, that supply chain issues, inflation, and “talent retention” are likely to remain challenges for News Corp’s book and newspaper publishing companies, at least for the short term.
For the first nine months of fiscal 2022, HC revenues rose 12%, to $1.68 billion, and earnings increased 2%, to $259 million. HC's fiscal year ends June 30.
