The trade publishing segment has been operating in a low-growth environment for several years, and that trend appears to have continued into 2016. Financial reports for the first half of 2016 from five major publishers showed that none of the companies had a sales increase in the first half of the year; HarperCollins had the best top-line performance, with only a minor sales decline compared to the first six months of 2015. Earnings fell at three publishers in the period and rose at two. Though sales of print books have stabilized, all five reporting publishers said sales of e-books fell in the first six months of 2016 compared to the January–June 2015 period.

The most recent publisher to report results, Penguin Random House, said that revenue at the trade publisher fell 10.7% in the first six months of 2016, to 1.52 billion euros, while EBITDA (earnings before taxes, interest, taxes, depreciation, and amortization) fell 10.6%, to 185 million euros. Parent company Bertelsmann attributed the decline to the expected drop in e-book sales in the U.S. and U.K. due to changed retail terms, as well as the negative impact of currency exchanges. Partially offsetting those negative trends were steady physical book sales and gains in downloadable audio sales.

In a letter to PRH employees, CEO Markus Dohle said another factor in the decline in results was the lack of a mega-bestseller on the scale of The Girl on the Train and Grey, which helped drive revenue last year. He also pointed to a drop in e-book revenue as a reason for the sales decline, but noted that sales of digital audiobooks have had “a significant upswing.”

Revenue at HarperCollins in the first half of 2016 was nearly flat with the comparable period in 2015, with sales falling by

$1 million. The company, whose fiscal year ended June 30, 2016, saw sales rise 11% and EBITDA jump 52% in the fourth quarter.

The improvement in the fourth quarter, HC said, was due to solid frontlist sales. The final quarter of fiscal 2016 was also the first period in the last fiscal year in which HC was not facing difficult comparisons to fiscal 2015, when sales of the Divergent series and American Sniper generated $69 million more in revenue than they did in the last fiscal year. HC CEO Brian Murray observed that the fourth-quarter comparisons also reflected a settling down of the e-book pricing and business models that took place last year as discounting eased. For the full fiscal year, print sales were up at HC, but digital sales fell 15% with the drop in e-book sales offsetting gains in downloadable audio.

The minor gain in six-month sales at Lagardere masked a drop in revenue at its U.S. division, Hachette Book Group. Sales in the U.S. fell 6.6%, but HBG’s CEO Michael Pietsch said profits jumped 180%. He attributed the earnings improvement to “disciplined cost management.” Revenue and earnings comparisons exclude the purchase of Perseus Books Group’s book division, which HBG completed at the end of March.

For the first six months of 2016, Simon & Schuster managed to post a gain in profits despite a drop in revenue. Parent company CBS said the 3.5% decrease in revenue reflected lower digital and print book sales, while the increase in operating income was driven by lower production, selling and inventory costs, which more than offset the decline in revenue.

The Houghton Mifflin Harcourt trade group was the only publisher to report a loss in the first half of 2016, and that loss deepened compared to last year’s first six months. The 1.4% dip in sales was led by a decrease in e-book sales, which HMH attributed to fewer movie tie-ins of bestselling e-book titles coupled with lower e-book-subscription revenue. Partially offsetting the decline were higher frontlist sales.

January–June Financial results, 2015–2016 ($ in millions)

2015 2016 Change
Sales $792.0 $791.0 -0.1%
EDITDA $89.0 $86.0 -3.3%
Margin 11.2% 10.9%
Houghton Mifflin Harcourt Trade
Sales $71.2 $70.2 -1.4%
Adjusted EDITDA ($0.7) ($3.4)
Sales €968.0 €970.0 0.3%
EDITDA €36.0 €36.0 0%
Margin 3.7% 3.7%
Penguin Random House
Sales €1,697.0 €1,516.0 -10.7%
EDITDA €207.0 €185.0 -10.6%
Margin 13.9% 10.0%
Simon & Schuster
Sales $344.0 $332.0 -3.5%
Operating profit $37.0 $39.0 5.4%
Margin 10.7% 11.7%

Source: company reports, publishers weekly.