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Margins improve at 'solid' Penguin

30.07.07 Alison Flood

Penguin has reported underlying sales growth of 1% and an increase in underlying profits of 11% in the first half of 2007 over the same period in 2006, in what chairman and c.e.o. John Makinson described as a "testing period for chain bookstores". The underlying figures sit against a headline slide of 5% in sales for the publisher in the first six months of 2007 to £367m, down from £387m in the first half of 2006. Adjusted operating profit was £18m, flat from £18m in the first half of 2006.

Parent company Pearson said the publisher showed steady sales performance in the US and UK "despite challenging retail market conditions", as well as "further margin improvement". It also showed faster growth in international markets and through digital channels.

Penguin said that visits to its website, penguin.co.uk, have increased 12% compared to the same period last year, whilst online sales volumes and revenue are up 46% and 22% respectively. Revenue from DK sites in the US and UK are up 32%, while digital audio sales increased eightfold (from a low base) in the first quarter.

Makinson said he was "delighted" with Penguin's performance so far in 2007. "It's been a testing period for chain bookstores, but we continue to see good growth in online sales and the supermarket channels in the UK. The consistent quality of our publishing has allowed us to maintain progress in sales, while the double digit growth in our underlying profits reflects continued success in the management of our cost base. There is more to come in the second half. A long list of great authors and titles should ensure continued growth and success."

Overall, Pearson saw underlying sales up 6% to £1.7bn in the first half of 2007, with operating profit up 48% to £91m, according to results released this morning. The publishing group said all its divisions delivered a strong performance in the first half of the year, with Education increasing sales by 7% and moving into first half profit of £5m and the FT Group's revenues up 8% with profits up 28%.

Chief executive Marjorie Scardino said: "Our half-year results are always just a hint of our potential for the year, but certainly a strong hint this year. The Financial Times Group is showing the value of its unique strategy; Penguin's publishing and profit are both solid and promising, as is its approach to change in publishing; and in Education we continue to set the pace as we use technology to personalise learning.

"Our investments in content, technology, international expansion and efficiency have put us in a position to lead, and we're leading. While our markets are changing fast, we are continuing to innovate to stay ahead of that change. That dynamic strategy will make 2007 another good year, and makes this quality of performance sustainable."

Penguin Marjorie Scardino John Makinson Alison Flood

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