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Islington-based publisher Quarto said subdued trading continued in the third quarter, with some improvement in September. Revenue for the nine months to September 30 fell to $127.2m from $130.7m the year before. Pre-tax profit for the same period declined to $5.5m from £6m previously. The group said its trading performance in the nine months and 12 months to September 30th continues to be in line with expectations. "Following the response to our products at the Frankfurt Book Fair in October, we noted that licensees and distributors around the world are largely adjusting to a world in which online retailing and digital books have challenged long-entrenched business models," Quarto said. 2012 digital sales rose to 1.7% of total revenues at $2.225m compared to $1.455m in 2011. "In all English-language markets, traditional bookstore revenues are under pressure," it noted.
GECR Target price 251p The Quarto Group Better Than Expected Interim Results Despite the challenging global economic environment, the Quarto Group announced better than expected interim results, as a continued strong performance from its Book Publishing segment more than compensated a weaker one from its International Co-Division. The group also recently received a written request for a special meeting of shareholders to vote on two resolutions. The resolutions are to remove Laurence Orbach (co-founder, chairman, chief executive officer and largest individual shareholder) as a director of the company; and to elect Tim Chadwick as a director. While we await further news on this, with a significant part of revenues still to come in the second half of the year, we rate the shares as a strong buy.
Canaccord Genuity maintained its "buy" rating for Quarto Group* (QRT) with a target price of 165p. The illustrated books publisher's first half results were slightly ahead of the broker's forecasts, with profits rising by 13% year-on-year. Canaccord believes the firm's core illustrated, special interest titles will be relatively unaffected by the rise of E-Books, while the broker added that the company is actively looking to reduce costs.
Valuation: Remains deeply discounted Our arguments on valuation are well rehearsed. The refinancing announced with the prelims should reassure the market that the debt is not such a burden as to limit operational management. The balance sheet is conservatively stated and does not reflect the full value of the backlist, which generated 64% of book publishing sales in FY11. The dividend was increased at the prelims, indicating that management is confident with trading, giving a covered, and premium, yield.
http://www.edisoninvestmentresearch.co.uk/researchreports/Quarto180712update.pdf
27th March 2012 Analyst: Emanuil Manos Halicioglu Email: emanuil.halicioglu@gecr.co.uk Tel: 0207 562 3368 The Quarto Group - Improved first quarter performance. Strong buy with a 253p target price
12th March 2012 Analyst: Emanuil Manos Halicioglu Email: emanuil.halicioglu@gecr.co.uk Tel: 0207 562 3368 The Quarto Group - Initiation of coverage. Book publishing play with a resilient business model. Strong buy with a 253p target price.
Islington-based publisher Quarto posted a 5% increase in full year adjusted pre-tax profit and upped its final dividend by nearly 10% as it battles against the decline of bookstore shelf space. Adjusted pre-tax profit rose to $12.1m for the year ended 31 December 2011 from $11.5m the year before. Revenue increased to $186.1m from $176.4m previously. Net debt increased 14% to $81.4m, which includes the cost of two acquisitions. Revenue at its publishing division was up 6% at $123.6m while digital revenues totalled $2.1m in the year compared to $0.42m before. “Book publishing is a mature business facing significant change, and the trading background is generally subdued. Quarto has done a good job: wrestling with the challenges, adapting to changing circumstances, and executing measured responses," said chairman and chief executive officer Laurence Orbach. He added, “It is difficult to ignore the apocalyptic tone of many reports about the industry, and the evidence that it is facing profound challenges that must be addressed… We continue to redouble our efforts to make and sell good books.”
Book publisher The Quarto Group (QRT) recommended a final dividend of 4.15p, up from 4p in the comparable period a year earlier, as it reported on a "good trading performance" for the year ended 31st December 2010. In light of the enhanced dividend offering, dividend per share for the year was up 5% to 7.5p. Pre-tax profits for the year rose by 8% to 7.4 million pounds on revenue 7% greater at 113.8 million pounds. Commenting on this, the group said it had seen a continued focus on developing markets, in particular Brazil and China, and improved trading in the UK and Australasia. Quarto shares leaped 15p to 150p.
Look at the name of the Finance Director Enquiries: The Quarto Group, Inc. Laurence Orbach (Chairman & CEO) 020-7700 9003 Mick Mousley (Finance Director) 020-7700 9004