The Bookseller.com

2nd December 2008

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'Vintage' six months for Penguin

28.07.08 Catherine Neilan

Penguin has seen sales rise by 9% and operating profit by 22% in its first half, in what its chief executive John Makinson called a "vintage six months". The results were revealed in its parent Pearson's six month update, with the breakdown of sales indicating that Pearson Education was the group's strongest performer with a 17% increase on last year, while FT Group sales were up 11%.

Penguin's sales reached £408m in the half-year, compared with £367m a year earlier. Its operating profit was £26m, against £18m last year--representing growth of 28% on a underlying basis. Pearson said that its strategy to grow Penguin's profits "significantly and consistently" was working, and that the business was in a strong position to sustain its publishing and commercial success and achieve its target of double digit margins in 2008.

John Makinson, chairman and c.e.o. of Penguin Group, added: "This has been a vintage six months, thanks to outstanding performances in every territory. The US company led the industry in #1 New York Times bestsellers; Penguin UK turned Devil May Care, the new James Bond novel by Sebastian Faulks, into the fastest-selling hardcover novel in its history; and we were named Publisher of the Year in both Australia and Canada on the same day. All this publishing success translated into an increase in underlying sales and an improvement in profits."

Pearson has split out its international education business for the first time, with the division recording sales up 21% to £365m and profit up to £20m. Pearson said that over the past five years, it had increased headline sales at a compound annual growth rate of 14% (from £431m in 2003 to £735m in 2007) and headline operating profit almost eight-fold (from £12m in 2003 to £92m in 2007). "We believe this business can deliver good organic sales growth and steady margin improvement as we benefit from our growing scale, the adaptation of Pearson content and technology for new markets, and continued efficiency moves," the group added.

At its North American education business, sales were up 18% to £713m, with an operating loss of £16m reported. Pearson said that its education business was trading in line with expectations. Overall, it education business reported profit of £14m, on sales of £1.2bn.

At Pearson as a whole, adjusted operating profit rose 38% from £86m this time last year to £124m, with sales up 14%, from £1.7bn to £2bn.  Marjorie Scardino, chief executive of Pearson, said: "Our momentum is strong, even in these tough economic conditions."

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