The uneven performance in the publishing industry in 2002 was reflected in the results of three the industry's three largest printers. Net sales in R.R. Donnelley's book division slipped 0.4% in the year, to $705.4 million, while sales in Quebecor World's book group fell 3.2%, to $513 million. At Banta Corp., sales in its printing and digital imaging group also fell 3.2%, to $977.3 million, although the company said that its book division "had a good fourth quarter and an excellent 2002."

The sales decline at Quebecor was attributed to a drop in reorders in the first half of 2002, plus a year-long decline in orders for high-priced leatherbound Bibles. For 2003, Quebecor is not budgeting for significant growth. The company is expecting a soft first half of the year, but expects a stronger finish due in part to an increase in textbook orders. Quebecor's year, however, could change substantially if it secures the lead role for the printing of Harry Potter and the Order of the Phoenix, which is set for release June 21. Quebecor was the primary printer for Goblet of Fire.

Strong activity in the educational market fueled Banta's growth in 2002. CFO Gerry Hensler said Banta benefited from growing demand for shorter print runs, "which fits our capabilities perfectly."

Donnelley's full-year results were helped by a strong fourth quarter, when net sales rose 7.8%, to $179 million. Book publishing was something of a bright spot for the company. It posted a 0.4% decline in the year, compared to an 11.8% drop in sales for Donnelley's entire print group and a 10.2% decline in total company sales, to $4.75 billion, in the year. The company is looking for little growth in 2003, although that could change if the printer picks up some Phoenix business, similar to the Goblet printing it did in 2000.

Sluggish sales growth for printers does not always mean bad news for publishers, however. Paper prices, which began falling in the fourth quarter of 2000, continued to fall throughout 2002, depressing printers' revenues. Excluding the impact of paper, Donnelley's 2002 sales were up 2.3%. Print executives expect paper prices to remain soft in the first half of 2003, although a rise in prices could occur in the last six months of the year. Another important issue confronting printers, overcapacity, is not expected to ease this year unless general economic conditions improve; without an increase in demand, printers will be hard-pressed to keep prices from falling.