Publishers remained profitable in the first six months of this year, but margins slipped at four of the six major companies that report financial results, compared to the first half of 2013.

Penguin Random House, the world’s largest trade publisher, was one of the four companies at which operating margins fell. Direct year-over-year comparisons are impossible since the house’s figures for the first six months of 2013 include only RH sales. (Penguin posted sales of £513 million and £28 million in operating profit in the first half of last year, before the two companies merged.) While PRH parent company Bertelsmann said the integration of Penguin and Random House is “on track,” the combined operating margin of 10.9% in the first half of 2014 was down from RH’s 14.3% in the same period last year (Penguin’s operating margin was 5.4%). Still, PRH CEO Markus Dohle called the first-half performance “solid,” with sales from the publisher’s children’s operation leading the way.

Lagardere Publishing also saw its margins fall in first six months, largely due to weakness in France and other European markets. Sales at its U.S. subsidiary, Hachette Book Group, were up 5.6% thanks to the addition of more than 1,000 Hyperion titles and its takeover of distribution for Disney. The increase came despite a decline in U.S. e-book sales, which fell to 29% of trade HBG sales in the first half of 2014, down from 34% in the same period last year. HBG cited fewer movie tie-ins and the “punitive” action of Amazon as causes of the drop in revenue. E-book sales represented 11.3% of all revenue at Lagardere, the same share as in the first half of 2013.

HMH trade group had a rough first six months of 2014, with revenue down 14% and adjusted EBITDA of just over $600,000, compared to $11.3 million in the same period last year. (The company had an operating loss of $6.9 million in the six-month period, compared to operating income of $2.9 million in the first six months of 2013.) HMH said both backlist and frontlist revenues were down in the first half, due to strong sales of Life of Pi and The Hobbit in backlist and Francona in frontlist in early 2013. Digital sales were 16% of HMH Trade’s overall revenue in the first six months of 2014, the same as in the comparable period last year.

Simon & Schuster managed to raise sales and earnings in the first half of 2014, despite a decline of more than a 9% in e-book sales, which CEO Carolyn Reidy said was due to overall market trends, plus a couple of S&S titles in 2013 that did particularly well in e-book format. Gains in print revenue offset the decline in digital, and were aided by strong print sales for Hard Choices by Hillary Clinton.

HarperCollins had an 11.7% increase in sales in the first half of 2014, and profits jumped 68% in the period, a performance that helped lead HC to solid results for its fiscal year that ended June 30, 2014. The big driver for both the most recent six months and the full year was the Divergent trilogy, which sold 19 million units (35% were e-books). E-book sales overall were up about 35% for both the year and in the six-month period, and accounted for 22% of HC’s worldwide revenue in fiscal 2014.

HC’s newest subsidiary, Harlequin, closed out its run as a Torstar company with a decline in sales and earnings, which fell 3.3% and 24.9%, respectively, in the first half of 2014. A decline in North American sales was cited as the major reason for the poor performance. HC officially completed its purchase of Harlequin on August 1.

Operating Performance, January-June 2013 vs. 2014

(in millions)

2013 2014 % Change
Penguin Random House
Total Sales €915.0 €1,461.0 59.7%
Operating EBITDA 131.0 159.0 21.4%
Margin 14.3% 10.9%
Lagardere Publishing
Sales €917.0 €903.0 -1.5%
Recurring EBIT 71.0 51.0 -28.2%
Margin 7.7% 5.6%
Total Sales $640.0 $715.0 11.7%
EBITDA 51.0 86.0 68.6%
Margin 8.0% 12.0%
Simon & Schuster
Total Sales $360.0 $364.0 1.1%
Operating income 30.0 34.0 13.3%
Margin 8.3% 9.3%
Total Sales C$189.3 C$183.0 -3.3%
Operating Profit 23.3 17.5 -24.9%
Margin 12.3% 9.6%
Houghton Mifflin Harcourt Trade
Total Sales $79.0 $69.3 -14.0%
Adjusted EBITDA 11.3 0.6 -947.0%
Margin 14.3% 0.9%