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Lagardère announces First Half 2020 results

Paris-July 30, 2020

Lagardère announced results for First Half 2020 today. Highlights of the company’s financial performance are as follows:

At Hachette Book Group:

Hachette Book Group CEO Michael Pietsch said, “HBG’s first-half revenues held, declining only slightly despite the vast business challenges of the pandemic.  Especially strong performances came from the Orbit division with The Witcher novels, fueled by the successful Netflix series, and Little, Brown, with continuing sales of Malcolm Gladwell’s 2019 bestseller Talking to Strangers. Unit sales grew over last year, with an increase in sales of lower-price formats such as mass-market paperbacks, ebooks, and downloadable audio largely offsetting decreases in adult hardcovers and trade paperbacks.  During the pandemic, the work of our warehouse team to keep our books shipping has been remarkable, and our marketing and publicity groups have nimbly reinvented the ways we connect writers with readers.

The fact that the massive retail disruption caused by the pandemic did not impact revenues significantly demonstrates the enduring appeal of books, the benefits of our multi-outlet, multi-format business, and the deep attachment readers have to Hachette’s authors.  Readers need books and will seek them out in many places even when favorite independent and chain bookstores are closed.  We have worked closely with independent bookstores to help them reopen, with an extensive offer of special terms.

Important new and backlist books by Black writers, including So You Want To Talk About Race by Ijeoma Oluo, Stamped by Jason Reynolds and Ibram Kendi, Kendi’s Stamped from the Beginning, Little Leaders by Vashti Harrison, Why Are All the Black Kids Sitting Together in the Cafeteria by Beverly Tatum, and Talking to Strangers by Malcolm Gladwell were bestsellers in the second quarter, joining books from established bestselling novelists including Walk the Wire by David Baldacci, The 20th Victim and The Summer House by James Patterson, Fair Warning by Michael Connelly, 28 Summers by Elin Hilderbrand, The Last Trial by Scott Turow, and The Boy from the Woods by Harlan Coben.

It’s thrilling to see the anticipation for the August 4 publication of Stephenie Meyer’s Midnight Sun, with the largest pre-orders in HBG’s history. And we have an outstanding Fall season ahead, with exciting new books from Joe Abercrombie, Ayad Akhtar, David Baldacci, Sandra Brown, Chris Colfer, Michael Connelly, Ayesha Curry, Guillermo del Toro, Robert Galbraith, Lev Grossman, Neil Patrick Harris, Elin Hilderbrand, TD Jakes, Joyce Meyer, Ijeoma Oluo, Joel Osteen, Chuck Palahniuk, James Patterson, Jerry Pinkney, Jeanine Pirro, Marcus Samuelsson, David Sedaris, Nicholas Sparks, and Lindy West, among many others.

We have been focused intensively in the second quarter on making HBG a more inclusive company, with diversity that mirrors the population of our country and our marketplace. The feedback we have received from across the company has been powerful, and I’m grateful for the candor of our employees, which is guiding our path forward.”

At Hachette Livre:

Hachette Livre delivered revenue of €971 million, down 7.0% on a consolidated basis and up 8.3% like-for-like. The difference between consolidated and like-for-like data is due to a €6 million positive scope effect linked mainly to the acquisition of Blackrock Games and Short Books, and to an €8 million positive foreign exchange effect chiefly resulting from the appreciation of the US dollar.

After a first quarter down 3.3% like for like (up 5.6% over January and February and down 18.9% in March), revenue in second-quarter 2020 retreated 12.2% year on year (with a decrease of 38.6% in April and of 21.8% in May, and an increase of 20.6% in June).

According to Lagardère’s press release, “The modest 8.3% decline testifies to the resilience of Lagardère Publishing activities, which leveraged the full benefits of its diversified business profile. Thanks to this strategic diversification, the division took advantage of two positive factors inherent to its growth model:

  • The balanced geographic profile of its business activities: in book publishing and distribution, English-speaking countries were less affected by lockdown measures owing to the relative importance of digital media and ecommerce in these markets
  • its diversified business portfolio, which covers Trade Publishing, Education, Partworks, Distribution and Mobile and Board Games.”

The first-half 2020 figures below are presented on a like-for-like basis:

  • In France: the division saw a 14.7% decline in first-half revenue due to the lockdown between March 17 and May 11, which led to the closure of virtually all points of sale, with the exception of supermarkets and newsagents. Illustrated book publishers were the hardest hit, while literary works fared better, buoyed by a good performance from Le Livre de Poche paperbacks and a record performance in June for large-format and Le Livre de Poche publishers. Board and Mobile Games were less affected than the publishing businesses, delivering growth of 7.0% and 21.4%, respectively.
  • In the US: First-half revenue for Hachette Book Group slipped just 1.0%. The good first-half performance is due to the success of The Witcher in the first quarter, and of best-selling titles from major authors including James Patterson, Michael Connelly, David Baldacci and Harlan Coben. Business in the US was also buoyed by the success of titles on subjects related to racism – a particularly resonant topic in the US since the end of May – and by fast-paced growth in digital formats throughout the first six months.
  • In the UK: revenue slipped 2.9% despite the closure of many points of sale and of all schools following the introduction of strict lockdown measures similar to those put in place in France. This resilience is mainly due to numerous best-selling titles in the first half, including The Witcher, Where the Crawdads Sing, The Silent Patient and Queenie. Robust growth in e-books and audiobooks continued during the first half.
  • In Spain/Latin America: revenue was down 5.2%, particularly in the Trade segment, which was hard hit by the closure of points of sale in the second quarter. This effect was partly countered by a textbook campaign in Spain that began earlier than the previous year.
  • Partworks: Revenue from sales of Partworks fell 15.2% owing to a reduction in the number of launches in the period (13 less than in first-half 2019), the absence of the runaway successes that had boosted first-half 2019, and declining sales of old collections. The crisis affected almost every country in which the division operates.
  • Ebooks: Ebooks accounted for 10.6% of total Lagardère Publishing revenue in the first half of 2020 (8.2% in first-half 2019), while digital audiobooks represented 5.3% of revenue (3.4% in first-half 2019).

Lagardère Publishing reported €27 million in recurring EBIT, down €9 million year on year. According to the press release, “The flow-through rate for the first half of the year came out at 29% after restating the Partworks business, which postponed most of its launches to the second half. Flow through is lower than the projection previously announced (by around 35% to 40%) thanks to a more favorable revenue mix driven by growth in blacklist sales and a sharp rise in sales of e-books and audiobooks. It is also the result of the swift implementation of cost-cutting measures in all businesses and geographies.”

At Lagardère:

The Lagardère group reported revenue of €2.088 billion in the first half of 2020, down 38% like for like.

“Group recurring EBIT for first-half 2020 was a negative €218 million versus a positive €88 million in first-half 2019, representing a €306 million decrease. The measures taken to systematically and significantly reduce costs for all our activities from the onset of the crisis offset the impact of the sharp decline in revenue. Against this backdrop, Lagardère Publishing recurring EBIT was virtually stable, at €27 million compared to €36 million in first-half 2019.”

Read Lagardère’s press release for further details.