How Is Shift Towards Digital Platform Affecting Bloomsbury Publishing PLC (BMY)?

  • May 24, 2019 BST
  • Team Kalkine
How Is Shift Towards Digital Platform Affecting Bloomsbury Publishing PLC (BMY)?

Bloomsbury Publishing PLC (BMY) is a London, United Kingdom-headquartered medium-sized independent global publisher. The group was established in 1986 and is a leading independent publishing house. The company is the originating publisher and custodian of the Harry Potter series and has built up an extremely valuable portfolio of content and rights based intellectual property assets, supported by authors who have won the Nobel, Pulitzer and Booker Prizes. The group’s operations are differentiated in two publishing divisions: Consumer and Non-Consumer.

Key Financial Highlights (FY 2018, in £m)

During the year, revenue surged by 13% to £161.5 million, reporting the same growth at constant currency basis. Consumer division revenue rose by 20% to £102.2 million, while Non-Consumer revenue increased by 4% to £59.3 million. Reported operating profit grew to £11.54 million, up from £9.4 million in FY 2017. Profit before tax and highlighted items increased by 10% to £13.2 million, while on constant currencies, it rose by 13% or £1.6 million to £13.6 million. Driven by a strong trading performance of the company, profit before highlighted items and after tax rose by 10.5% to £10.5 million. Diluted EPS after deducting highlighted items were up by 23% to 12.06 pence, while diluted EPS before highlighted items rose by 10% to 13.92 pence.

Share Price Commentary

Daily Chart as at May-24-19, before the market closed (Source: Thomson Reuters) 

On 24th May 2019, at the time of writing (before the market closed, GMT 10:00 am), BMY shares were trading at GBX 235, up by 1.73 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 257.00/GBX 182.32. On the valuation front, the stock was trading at a trailing twelve months PE multiple of 15.1x as compared to the industry median of 10.3x. The company’s stock beta was 0.54, reflecting less volatility as compared to the benchmark index. Total outstanding market capitalisation was £174.10 million, with a dividend yield of 3.45 per cent.

Conclusion

As Non-Consumer revenues have higher margins, have more digital opportunities and are generally a more predictable revenue stream, the company plans to Grow Non-Consumer revenues so that they match or exceed Consumer revenues. Bloomsbury’s excellent results are underpinned by its high-quality stable of authors, and the group aspires to continue to attract, spot and retain high-quality talent in the Consumer division, including works by undiscovered and established authors. To reduce reliance on the UK market and take advantage of growth potential in emerging markets, the group seeks to expand internationally in English language markets. The group is also making an aggressive push into digital markets, with an aim to grow revenues from digital-only products and services to £15 million revenue and £5 million profit by 2022. However, the company is a long way off from making serious inroads in the digital market, and there is an increased dependence on internet retailing. Also, sales of books to the consumer market can be volatile and there has been a rise of alternative book supply arrangements.

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