Quarto’s profits decline by 58% despite children’s sales growth

Global illustrated book publisher the Quarto Group has reported its operating profits declined by 58% to US$7.2 million (A$9.4 million) last year, while its sales declined marginally by 1.4% to US$152.5 million (A$198.8 million), reports the Bookseller.

The company reported sales in the second half of 2017 were up by 5.8% following a ‘disappointing’ first half. However, due to the ‘tough retail environment’ it experienced high levels of returns, and was also impacted by the rising costs of printing and raw materials. Quarto said other factors that affected its operating margin were royalty expenses (since trade sales have become a larger part of its offering) and higher product development costs stemming from the integration of Becker & Mayer, which Quarto acquired in 2016.

The acquisition of Becker & Mayer boosted Quarto’s children’s division, where sales rose by 19% in total, and by seven percent excluding the Becker & Mayer purchase. Children’s products now account for a third of Quarto’s total revenue, with adult making up the rest of the company’s product mix. Quarto also cited a ‘lack of any notable growth in the mature adults publishing market’, a situation it said was ‘unlikely to change’.

Quarto chief executive Marcus Leaver told the Bookseller it had been a ‘tough year, but we dealt with it better than others, and we are very happy with the second half’. Leaver said that the group was now in the right shape, but he wanted to continue to reduce its debt.

Category: International news Junior