Profits up 4,150% at Quercus, as Larsson drives sales up 75%
26.05.10 | Catherine Neilan
Stieg Larsson’s UK publisher Quercus has reported strong results for the 2009 calendar year, with turnover up 75%, profits up 4,150% and a positive cash flow for the first time in the company’s history.
According to a statement released to the markets this morning (26th May), the publisher saw revenue grow from £10.9m in 2008 to £19.1m last year, with consolidated operating profit up from £28,000 to £1.19m. The publisher said this was carried out with “a comparable cost base” and headcount to 2008. Cost of sales were all reduced in percentage terms. Cash flow was £420,000 for 2009, compared with a net outflow of £1.54m the year before.
The results also highlighted that Quercus was the fastest-growing trade publisher of last year – a point revealed by The Bookseller this January – climbing from 42th largest to 18th largest overall.
In his review, chief executive Mark Smith said much of the publisher’s success had come from the Larsson trilogy, the first volume of which last week passed the seven-figure sales mark. The company is still expecting to benefit from this, as it holds rights to the US, Canada, Australia, New Zealand and South Africa. Quercus also has e-book and audio rights to the three books.
Other books contributing to its growth included John Ajvide Linqvist’s Let the Right One In, boosted by the film adaptation, and from non-fiction, Duncan Hamilton’s Harold Larwood, which won the William Hill Sports Book of the Year.
Despite the company’s growth, Quercus’ has written off a sum thought to be around £1.5m from the value of its current assets – which includes the original investment in books, in the form of advances – in light of what it described as the “very difficult market conditions prevailing in publishing and the wider commercial arena”. This has led to a decrease in the gross profit percentage to 36%, down from 44.5%.
Smith explained that the company felt this was “a prudent measure while Quercus continues to monitor the changes in the markets in which it operates and in the industry as a whole. This approach leaves us in a strong position going forward”.
Smith said Quercus would continue to strengthen its balance sheet, and would “look to take advantage of any strategically appropriate growth opportunities available to us, especially in the digital arena”. He added: “Significant marketing investment will be made in our authors to extend their audiences and build them as substantive brands in their own right and further editorial resource will be added to ensure that Quercus continues to acquire and create the best possible intellectual property.”
Quercus also released a forecast for the current financial year, based on unaudited accounts. For the first four months of 2010, the company’s performance has been “well ahead of management forecasts” – revenues of £10.9m compared with £3.1m last year, with profit rising from £40,000 to £2.5m. Full year results are expected to “exceed market expectations significantly” it said.
As a result of its new financial stability, Quercus said it had managed to cut payment periods to creditors from 126 days to 74, and would maintain this going forward.