Increases in sales of e-books and digital audiobooks and higher online sales helped to cushion the financial impact of the Covid-19 pandemic at Penguin Random House, parent company Bertelsmann reported this morning. Total revenue in the first half of 2020 fell 1.4% at PRH from the comparable period a year ago, dropping to €1.63 billion. EBITDA (earnings before interest, taxes, depreciation, and amortization) fell 7.9%, to €209 million. In April, Bertelsmann also acquired the remaining 25% stake in PRH that had been held by Pearson.
The U.S. had the best performance among PRH’s international companies, with sales rising 5.2%, to €990 million. “The coronavirus pandemic had a negative impact on the company’s businesses due to the extensive closures of local bookstores,” Bertelsmann reported. “In contrast, the US business demonstrated particular resilience, partially offsetting reductions in other countries.”
Within the U.S., the top-selling fiction title in the first half of 2020 was Where the Crawdads Sing by Delia Owens, which sold more than 1.6 million copies, bringing its sales in North America to over 6.5 million copies across all formats since 2018, Bertelsmann said. In nonfiction, Untamed by Glennon Doyle and Michelle Obama’s memoir, Becoming, each sold over one million copies, while How to Be an Antiracist by Ibram X. Kendi “was also a major bestseller,” Bertelsmann said.
In a video message from his home to company employees, PRH global CEO Markus Dohle attributed the solid performance during the pandemic to PRH’s ability to react quickly to changing market conditions. In particular, he cited PRH’s ability to capture more online sales as lockdowns slowed sales through physical stores. “We never could’ve predicted a global pandemic, but we’ve been working toward a world in which online sales channels would have an even larger share of our overall book sales,” Dohle said . “A world in which we would need to activate every single competitive advantage we have been investing into over the last 10 plus years. So now is the time. The time to benefit from all our investments into supply chain, into corporate marketing, into consumer marketplace developments, and to focus even more on driving sales online.”
The increase in online sales is reflected in the growth of digital revenue in the first six months of the year, with digital sales across the company up 15% over the comparable period a year ago.
With a strong fall/holiday list, investments in the supply chain, and the recovery of book sales in most of its markets, Dohle said he remains confident PRH “will deliver a very good 2020 and - even more importantly - that we will emerge from this crisis stronger than ever before. “
PRH was one of Bertelsmann’s strongest performers in the first half of 2020. In the period, total revenue fell 8.9%, to €7.85 billion, and profit fell to €488 million from €502 million in the first six months of 2019.
Bertelsmann said that while the pandemic has had only a minor impact on its service, education, book publishing, and music businesses, the virus has hurt its “advertising-financed business” of RTL Group and Gruner + Jahr. “Because of the extreme uncertainty surrounding the further course of the coronavirus pandemic,” Bertelsmann said, its forecast for the rest of the year has a “significantly higher degree of uncertainty than usual. Assuming that infection rates do not begin to climb again in the second half of 2020, Bertelsmann anticipates that, for the financial year 2020, revenues will decrease moderately to significantly and operating EBITDA will fall strongly.”