Three of the industry's largest printers reported continued softness in their book operations for the third quarter ended September 30. Weak demand and overcapacity resulted in negative pricing pressures that depressed sales, said printing executives at R.R. Donnelley, Banta and Quebecor World.

Net sales at R.R. Donnelley's book operations fell 4.2%, to $185.7 million, in the quarter, while value-added revenue slipped 1.2%, to $135.3 million. Company chief financial officer Greg Stoklosa said that while units were flat in the quarter, Donnelley was still able to increase its market share. In addition to pricing pressures, Stoklosa said, sales dropped as the result of publishers moving more of their product from hardcover to paperback, which yields lower value-added revenue and lower margins. For the nine-month period, net sales were off 3.4%, to $508.4 million, while value-added revenue fell 2.1%, to $369.4 million.

In a conference call with analysts, John Campanelli, president of the print division, insisted that Donnelley's book group is increasing its market share with preferred customers. He noted that about half of the book group's sales are secured through multiyear agreements with some of the nation's largest publishers, including McGraw-Hill, HarperCollins, Pearson and Random House. Campanelli also said he is seeing signs that the pricing pressures facing printers is beginning to ease.

Campanelli said Donnelley is looking for ways to serve publishers throughout the supply chain. The company's inventory management service, aimed at providing shorter print runs for paperback backlist titles, has printed 250,000 books since its launch in the second quarter. And Donnelley's print-ahead program, which shifts production to off-peak hours for backlist titles, has printed six million books. Donnelley is also now printing educational, trade and professional titles at its Chinese plant, and Campanelli said he believes the ability to print in China will become more important to U.S. publishers.

In a corporate matter, outgoing CEO Bill Davis said a search committee is continuing to look for his replacement. Davis announced in July he would retire once a successor is found.

Over at Banta, sales in the printing and digital imaging business fell 9% in the quarter, to $243.6 million. Within the group, book division sales were down 17%, due to a decline in both the educational and trade book markets. Sales were also hurt by a drop in paper prices. Banta CEO Stephanie Streeter told analysts in a conference call that she was confident that the entire Banta Corp., including the book division, would have a better 2004. Streeter said she believes business in the education market "has reached a low point." Streeter said "next year has to be better," noting that states can only delay buying new textbooks for so long.

At Quebecor World, total sales in North America fell to C$1.28 billion ($960 million) from C$1.32 billion. According to David Boles, chief operating officer for Quebecor World North America, sales in the book group were down in the quarter as publishers continued to reduce inventories, while also scaling back print runs. Tight state budgets have negatively affected textbook orders, Boles added.

To help offset the bad news, Boles pointed to the success Quebecor World had with turning around its book manufacturing facility in Kingsport, Tenn. The plant "is making money again," Boles told analysts in a conference call. The company completely restructured the facility by cutting the work force, decommissioning old equipment and outsourcing certain processes. The plant is now doing about the same volume of work, but because of reduced overheads Kingsport is now a profitable operation, Boles said. Cost reduction is the theme across all of Quebecor World's businesses. Through the first nine months of the year, the company eliminated 1,174 positions in its worldwide operations.