Bloomsbury boosted by children’s division

Bloomsbury Publishing (BMY) has posted its strongest ever set of half-year results, fuelled by strong demand for children’s books. Group sales grew by 11 per cent to £137mn, while adjusted profit before tax increased by the same amount to £17.7mn.

There were some striking discrepancies within the results, however. Children’s trade was extremely strong, with sales increasing by 22 per cent to £61.7mn and adjusted profit before tax up by 29 per cent to £11.1mn. Twenty six years after first publication, Harry Potter and the Philosopher's Stone remained the fourth-bestselling children's book of the year, while young adult authors such as Sarah J. Maas are also proving extremely popular. 

“Fantasy is a huge and increasingly popular genre which has driven forward our consumer division,” management concluded.

Revenue growth within the adult division was also robust at 8 per cent, but profitability is far lower than in the children’s department and adjusted profit before tax came in at just £100,000. The non-consumer division came under even greater pressure. After an impressive performance last year, helped by a big acquisition, revenue growth almost stalled in the six months to August and adjusted profit before tax sank from £7.1mn to £5.9mn. 

Sales growth at Bloomsbury Digital Resources (BDR), which is a sizeable part of the non-consumer division and provides online academic texts through a subscription model, actually went into reverse, dipping by 2.2 per cent. This is slightly concerning, given that BDR has been marketed as an important source of future growth. However, management said it is still confident of achieving 40 per cent organic revenue growth over the five years to 2027/28, to reach a turnover of approximately £37mn.

Management expects the group as a whole to achieve revenue of £273mn in the year ending 29 February 2024, which would represent year-on-year growth of 3.4 per cent. Adjusted profit before tax is due to rise by 4.5 per cent to £32.5mn. So growth looks more subdued than it has done in the past, but this isn’t surprising given the economic backdrop – and management has a habit of posting profit upgrades. Bloomsbury’s forward price/earnings ratio of 13, compared with a five-year average of 16, remains tempting.