Bloomsbury profits fall post-Potter

Publishing group Bloomsbury has seen revenues and gross profit shrink by 18% and 11% respectively in the wake of the final book in the Harry Potter series.

Chief executive Nigel Newton insisted revenues for the first six months of £42.1m were in line with expectations. "Book sales have remained relatively resilient so far during the credit crunch".

Bloomsbury said the half-year had seen an emphasis on bottom-line growth and cash flow improvement after a huge push in the prior year behind Harry Potter and the Deathly Hallows, the last in JK Rowling's series released in hardback into export markets in June last year.

Newton said: "We have had a good first-half performance, particularly in the UK Adult and Specialist Divisions. As well as continuing to enjoy notable success from long-running best-selling titles such as The Kite Runner, we are also well positioned with strong publishing lists for the second half and beyond."

Upcoming releases include Alice Schroeder's biography of Warren Buffet entitled The Snowball, Just Me by Sheila Hancock and The Guernsey Literary and Potato Peel Pie Society by Mary Ann Shaffer. The keenly anticipated new book from Rowling — The Tales of Beedle The Bard — is to be released in good time for Christmas shoppers on December 4.

Bloomsbury said profit before investment income rose by 6.1% to £3.5m and net cash balances increased by 13% to £53.8m. Newton hinted he would be looking at acquisition opportunities when they arise, particularly in the area of academic publishing. One potential opportunity is already under consideration.

The absence of a Harry Potter release for the first half meant marketing and distribution costs were 22% lower at £6.8m. Gross margin increased from 42.4% to 46.1%, in part as a result of lower royalties due to authors. Newton said even without a new Harry Potter book, the publisher's top ten authors generated almost 30% of revenues during the six-month period.

Steve Liechti, an analyst at Investec, said Bloomsbury's figures showed "strong momentum despite the economic slowdown and a good roster of authors launching in the second half". He added: "The business is also benefiting from a more aggressive approach to costs in preparation for life post-Harry Potter."