Weakness in print sales in its Overseas markets led to a slight decline in revenue and earnings at Harlequin in 2011, parent company Torstar reported this morning. Revenue fell 1.9%, to C$459.4 million, and operating earnings were down 2.0%, to C$82.4 million. Foreign exchange had a negative impact on results, including depressing earnings by C$6 million.
In North America, total revenue rose by C$1.4 million in the year, while earnings increased by C$5 million, excluding the impact of foreign exchange. In the unit, growth in digital sales--up C$29.5 million--exceeded the C$23.5 million drop in print revenue. Direct-to-consumer revenues was down C$4.6 million in the year.
In its Overseas division, revenue was down C$6.5 million and operating earnings fell C$1.1 million in 2011 excluding the impact of foreign exchange and the benefit from the acquisition of the other half of the German business at the beginning of the second quarter of 2010. According to Torstar, economic weakness in Europe had a negative impact on Harlequin’s Overseas operations, and higher digital revenues, primarily in the U.K. and Japan, were not sufficient to offset lower revenues in the retail print and the direct-to-consumer businesses.
Overall, global digital revenues were 15.5% of total sales in 2011, up from 7.7% in 2010. Digital sales did particularly well in the fourth quarter, accounting for 17.7% of all revenue and Harlequin posted a 19% earnings increase in that quarter despite a C$2 million decline in sales.
Despite the good finish to 2011, Torstar said that “early indications are that the pace of digital revenue growth in North America has moderated in 2012.” Slowing digital growth, uncertain performance of the print segment plus “higher author royalties related to digital revenue” make likely it “difficult for Harlequin to match the very good results experienced in 2011” in 2012, Torstar said.