Despite dollar weakness and slowdown in the US, specialist book publisher Quarto issued resilient underlying numbers for the half year to June. On sales increased 20% to £43.8m, adjusted operating profits rose by an impressive 33% to £2.3m, although the group swung to a loss of £3.1m after amortisation and one off restructuring costs.

In spite of prevailing economic uncertainty, particularly in the key US market, chief executive Laurence Orbach held the half time dividend at 3.15p. ‘Thanks to our diversified international portfolio,’ he explained, ‘trading in the first half was much stronger than we might have expected.’

There are two parts to London-based Quarto – book publishing, where 60% of sales are derived, and the higher margin, high-visibility co-edition business, which creates books that are then licensed out to other publishers.

During the half, Quarto witnessed flat underlying growth year-on-year in the publishing business, reflecting stock level decreases by retailers in the US. Counteracting this, Quarto enjoyed encouraging 12% revenue growth to £13.4m in co-edition, where operating profits surged 85% higher to £700,000 and the bestselling series of ‘1001 Things You Must Do Before You Die’ went from strength to strength.

Despite US slowdown, house broker Collins Stewart sees turnover rising from last year’s £100.1m to £112.1m, with earnings increasing from 24.4p to 25.9p, placing Quarto on a prospective p/e of only 5.15. That seems a miserly rating for a cash-generative, dividend-paying and asset-backed concern with a backlist of thousands of titles underpinning future growth.

Quarto Group	LSE	£0.77m	100.50p	0.00p
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