Harry Potter Firm Bloomsbury First Half Sales Rise 36.5%
Harry Potter publisher Bloomsbury Publishing saw first-half sales jump 36.5% as export orders for the seventh Harry Potter book and 34 international bestsellers kept bookworms flocking to stores.
Chairman Nigel Newton told Reuters a strong book pipeline in the second half might help the firm beat expectations but profit could be held back by a higher-than-expected tax bill.
"We are projecting that taxes will impact full-year profit, but I think we will meet current expectations," Newton said.
Bloomsbury expects the effective tax for 2007 to rise to 33% from 29.4% as its U.S. operation is set to make a loss which cannot be offset against taxable profit in Britain.
Numis analysts currently forecast full-year pretax profit of 15 million pounds ($30 million). "We have tended to upgrade forecasts in a Harry Potter year, although problems in the U.S. and a rising tax rate will temper this," they said in a note.
Newton said sales of the seventh and final book of the boy wizard series, "Harry Potter and the Deathly Hallows," were going according to plan.
Export sales were up 31.4% as of Sep. 13 compared with the sixth book, while Nielson Book scan figures, that monitor sales out of the shops, showed that U.K. sales were 17.6% ahead as at Sep. 8., he said.
First-half revenues did not include British orders of the book, which was released on July 21 and became the fastest selling book in history. More than 11 million copies were sold during the first 24 hours in three markets alone.
Revenues in the six months to June 30 rose to 51.4 million pounds, boosted by bestselling titles such as David Dimbleby's "How We Built Britain" and the release of Harry Potter into export markets.
Bloomsbury's first-half pretax profit fell 8.5% to 3.86 million pounds as a result of lower interest received in the period.
"Operationally, this morning's results show encouraging signs of improvement following the difficulties of the second half of the financial year 2006," Altium analysts said in a note, referring to a slump in 2006 pretax profit to 5.2 million pounds from 20.1 million pounds a year earlier.
Bloomsbury puts hopes for growth in the second half on titles like "Divisadero" by Michael Ondaatje, author of "The English Patient," and a series of cookery books, including the "River Cottage Fish Book" by Hugh Fearnley-Whittingstall.
Newton, who founded Bloomsbury 21 years ago in his front room while on paternity leave, is prepared to take the company into the digital age and recently signed a deal for a reference database with Qatar Financial Centre Authority.
The aim is to develop an encyclopedia for financial concepts and situations, aimed at chief executives, finance directors and financial journalists, which will be available online and in book form.
Bloomsbury shares were trading down 0.6% at 170.5 pence, valuing the firm at 125.4 million pounds.