Thursday, February 28, 2008

Harlequin Improved

Harlequin revenues were flat for the full year 2007 versus 2006. Revenues of $462mm versus $471mm in the prior period were negatively impacted by foreign currency which accounted for almost the entire variance. EBITDA showed some improvement with 2007 results of $65mm versus $63mm. Excluding the impact of Forex EBITDA was $6.3mm better than 2007.
From their press release:

Excluding the impact of For Ex:

  • Overall Book Publishing revenues were down $1.0 million in 2007
  • North America Retail revenues were up $3.6 million
  • North America Direct-To-Consumer revenues were down $5.0 million
  • Overseas were up $0.4 million
  • Overall Book Publishing operating profits were up $6.3 million
  • North America Retail operating profit was up $5.8 million
  • North America Direct-To-Consumer operating profit was up $2.2 million
  • Overseas operating profit was down $1.7million

The company has spoken about their efforts to manage expenses in the North American business and they seem to have made some impact in that direction with the improved operating margins. Additionally, the company was not beset by any unforeseen operating issues that bedeviled them in prior years (like the bankruptcy of a distributor). The company also said that improved sales via the internet - primarily direct to home - price increases and lower (presumably more effective) promotional spending also supported the better margin performance.

It appears the company is focusing now on improving their international operations which appear problematic. The company recently announced an expansion of their efforts in Indian, which is not material in their current results, but they must also look to improve results in Japan and the UK. In both these countries there appears to be a shift in how consumers interact with Harelquin (Mills & Boon) with decreases in direct to home in the UK as an example. The company will look to use their experience in the US to improve the UK market. In Japan the company is experimenting with Manga versions and mobile phone distribution but as yet these efforts have not been significant to offset the decline in core sales.

Press Release

Of note also, is that Torstar the corporate entity that owns Harlequin also posted solid results especially in light of the declines in newspaper properties. Torstar revenue of $1,546.5 million grew 1% and EBITDA of $225million grew 11.5%. The company stated that all their primary operating units performed well.

No comments: