'Remarkable' Penguin helps Pearson brighten its outlook
26.07.10 | Philip Jones
Penguin has raised sales 9% and doubled its profits in its half-year helping it to "record" first half profits, while sister company Pearson International Education grew by 13%, with operating profits up 57%.
The results helped Pearson c.e.o. Marjorie Scardino claim that the group had made as "good a start to our year as I've seen" and prompted the quoted company to raise its outlook for the rest of the year.
At Penguin sales grew to £493m to 30th June 2010, up 7% at constant exchange rates, with adjusted operating profits up to £44m, compared with £21m a year earlier. In the UK its market share grew from 9.9% in the first half of 2009 to 10.7% in the same period in 2010, in the US 11.9% to 12.4% and 12.3% to 13.1% in Australia. The company also reported that e-book sales had grown three-fold.
Parent Pearson said that "Penguin profits benefited from a series of organisational changes made in 2009 at Penguin UK and Dorling Kindersley to strengthen publishing, accelerate the transition to digital, reduce costs and shift design and production to lower-cost markets". It added Penguin's first-half results also "benefited from a stronger market and publishing schedule in comparison with the first half of 2009".
Penguin Group chairman and chief executive John Makinson said: "These are remarkable results, achieved in markets that remain very challenging both financially and strategically. Penguin’s record first half profits reflect a publishing performance that was of consistently high quality across territories, genres and formats.
"We are seeing real benefits from the reorganisation of our UK businesses undertaken last year and from our decision to invest aggressively and early in digital content. The strength and depth of our publishing programme give us confidence that this level of performance can be sustained in the second half of the year."
The Pearson report said Dorling Kindersley had a particularly good first half with a "notable contribution" from its partnership with Lego, while the Penguin release noted both Penguin and DK Children’s divisions had an "excellent first half, posting significant sales growth in both the US and the UK". In the UK Penguin Children’s increased its market share from 10.8% to 13.3%.
At Pearson International Education, sales rose from £446m to £504m, 11% growth at constant exchange rates, with adjusted profits up from £23m to £36m. In the UK secondary school market, Pearson said it saw "good market share gains, particularly in English, supported by our high quality print and digital learning materials and Penguin Classics".
Earlier this month, Pearson announced a strategic partnership with Sistema Educacional Brasileiro (SEB) to provide services to its educational institutions and to acquire its school learning systems business for R$888m ($497m; £326m).
Overall the Pearson Group saw sales growth of 9% to £2.3bn, with adjusted operating profit up 79% to £178m. Marjorie Scardino, chief executive, said: "The 2010 finish line isn't yet in sight, but this is as good a start to our year as I've seen. That boosts our confidence in the full year, enabling us to brighten our outlook and raise our guidance."