Challenging conditions in the US retail market and adverse currency movements are to blame for Dorling Kindersley Holdings Plc’s issue of a profits warning in advance of the year end. Pre- tax profits for the half year to December 1996 are up 8.8% at 6.8m pounds on revenue up 9.9% at 88.4m pounds on the equivalent period last year. This is after restating the comparatives to include a change in accounting policy, multimedia development costs are now more prudently expensed and not capitalized. The London-based publisher of books and CD-ROM titles has performed below its expectations in the US book market. The US accounted for 38% of profits in the year to June 30 1996. To compound this, the strength of the pound has caused the company to predict in excess of 1m pounds of lost profit. There will be further short- term adverse effects on profitability from the decision to accelerate the growth of Dorling Kindersley Family Learning division. This grew 41% last year and the company is continuing to make excellent margins from these products which are used in homes and schools. The overall picture at the half-year stage is still one of profit but with reduced growth. With direct selling now expanding into Russia and Australia, group managing director Rod Hare remains confident in the company’s ability to sustain long term growth. It will pay an unchanged interim of 1.5p.
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