Although total sales for the fiscal year ended April 30 were below expectations, profits rose at John Wiley for the full year. Sales increased 2%, to $1.78 billion and operating income rose 13%, to $280.4 million. With 40% of its revenue coming from digital products and services in the year, Wiley said it has identified certain activities that will be “either discontinued, outsourced, or relocated to a lower cost region. As a result, Wiley will record an approximately $4.5 million charge for redundancy and related separation benefits in the first quarter of fiscal year 2013.”
Wiley president and CEO Stephen Smith said the company was pleased with its performance “given the challenges in some of our markets.” He added: “We will continue to explore ways of improving our cost structure to fund investments that accelerate and sustain our digital transformation.” Smith attributed the revenue shortfall
“to weak economic conditions in Europe, impacting all three of our businesses, a difficult year for higher education, particularly around for-profit enrollments, and retail challenges in the Professional/Trade segment, especially around our consumer business.”
The professional/trade business, Smith noted, is being transformed through the acquisition of Inscape and the possible sale of some of its professional/trade assets. Wiley’s Tuesday morning release had no new information on the sale, other than to repeat the assets (travel, including Frommer’s, culinary, general interest, nautical, pets, crafts, Webster’s New World, and Cliff’s Notes) had sales in fiscal 2012 of $80 million and a $6 million contribution to profit.
For the full year P/T revenue fell 1% to $434 million. Digital revenue, which includes e-books, online advertising, content-enabled services and content licensing, accounted for 15% of total dvision revenue, up from 10% in the prior year. E-book sales alone rose approximately 70% over prior year to $40 million, or 9% of total P/T revenue. Strong e-book growth came from all accounts, notably Amazon, Barnes and Noble and Apple. Improvement in gross margin in the year mainly came from the continued shift from print to digital and high margin and Inscape revenue.
By P/T segment, fourth quarter sales in the business division grew 9% to $41 million, with outstanding growth in digital sales. Sales in the consumer unit grew 4% to $35 million and sales in architecture rose 5% to $5 million. Sales in technology fell 5% to $22 million, dropped 4% in professional education fell. Sales in psychology fell 5% to $3 million.
In its largest segment, Science/Technology/Medical/Scholarly, revenue for the full year was up 2% to $1.04 billion. Top-line results were driven by increased journal subscriptions and production, new journal society business, book growth and journal reprint revenue. Digital book growth was partially offset by a decline in print book sales, Wiley said. Growth in Asia-Pacific and EMEA and an improving picture in the Americas contributed to the results. Digital revenue accounted for approximately 61% of total STMS revenue in fiscal year 2012.
In the Global Education division revenue fell 1% to $308 million. Declining enrollments in the for-profit segment and the impact of the prior year build-up of the rental market pipeline contributed to the decline, Wiley reported. Lower print textbook sales were partially offset by growth in non-traditional and digital revenue. Modest growth in North America was offset by declines in EMEA and Asia-Pacific. Full year revenue for WileyPLUS fell 2% to $32 million mainly due to a sharp decline in for-profit enrolment, while e-book sales grew 37% to $17 million.
Looking ahead to fiscal 2013, Smith said “we are encouraged by the continued underlying demand for our STMS products and services, particularly the significant growth around usage, society business, institutional licenses, article in-flow, and citations. We expect a moderately better outlook in the Professional/Trade business due to the acquisition and possible divestitures, and we are encouraged by a strong frontlist and the stabilization of the for-profit segment in education. We expect to achieve continued cost savings through restructuring and other initiatives. Based on all of this, we project mid-single digit revenue growth for fiscal year 2013 excluding [foreign exchange], and [earnings per share] in a range of $3.50 to $3.55 including [foreign exchnge] but excluding unusual items and the first quarter restructuring charge.”