Bloomsbury beats expectations on consumer titles uplift

Shares in Bloomsbury Publishing (BMY) were on the fly on results day, as the publisher’s interim figures outstripped market expectations. Intuitively you might expect that the company’s consumer division would benefit from a general increase in demand for electronic and print media during the pandemic, and 17 per cent top-line growth in the consumer division would seem to bear this out. Yet there were positive outcomes across the various business segments, demonstrated by a 47 per cent increase in sales for Bloomsbury Digital Resources.

It is perhaps ironic that some of the publisher’s most successful titles this year have explored contemporary attitudes towards race, gender, and privilege, when its star author JK Rowling is being hauled over the coals by some opposed to certain viewpoints expressed by the creator of the Harry Potter series. None of this seems to have put a dent in demand, with UK print sales of Harry Potter books increasing by 8 per cent between mid-July and the end of September.

Consensus gives EPS of 6.4p for February 2021, rising to 12.41p in FY2022.

Prospects for the second half, in which earnings have historically been weighted, are favourable on the back of a strong roll-out of titles, including the latest effort by the increasingly popular Sarah J Maas. That confidence is implicit in the company’s return to cash distributions following the issue of equity in lieu of the 2020 final dividend, leading to an implied yield of 2.8 per cent. Buy.

Last IC view: Buy, 250p, 29 Oct 2019