Strong growth at Penguin in first half, as Pearson posts loss

Strong growth at Penguin in first half, as Pearson posts loss

Pearson made an operating profit of £20m in the first half of 2013, compared with £52m the previous year, but after finance costs and a loss from discontinued operations, returned a net loss of £9m.

In its latest set of results, the company announced 2% underlying growth (5% at constant exchange rates) for the first half of 2013, to a total of £2.8bn. However adjusted operating profit fell £50m to £137m (£186m in 2012), including £37m of gross restructuring charges and investments to support new product launches in the second half.

Penguin saw underlying growth of 6% (14% at constant exchange rates) in its last half year ahead of its merger with Random House, with sales standing at £513m (£441m in first half 2012). Adjusted operating profit rose to £28m (from £22m in first half 2012).

Pearson said its education business saw "good" growth – 1% underlying growth and 3% at constant exchange rates - led by North America and developing markets. However adjusted operating profit fell in its North America education business from £62m in first half 2012 to just £13m, and in international education from £72m to £50m.

The company singled out digital businesses and developing markets as areas of particular growth, with 9% underlying sales growth in developing markets and education digital platform registrations up 19%, and Pearson said it would be "accelerating" its global education strategy, shifting its education businesses towards fast-growing economies and digital and services businesses.

It repeated its estimate of £150m for gross restructuring costs in 2013 (£100m including cost savings achieved during the year).

Chief executive John Fallon said: "In trading terms, 2013 has begun much as we expected. In general, good growth in our digital, services and developing-market businesses continues to offset tough conditions for traditional publishing. Our strategy is to transform Pearson into a single operating company that is sharply focussed on the biggest needs in global education and on measurable learning outcomes. With our restructuring programme on track and the reorganisation of the company under way, we are making significant progress towards that goal."

Of Penguin's performance, Pearson said: "In market conditions that remained challenging, Penguin had a good start to the year with market share gains and a strong bestseller performance in all major territories reflecting a stronger publishing schedule in the first half."

E-book revenue accounted for 21% of Penguin's global revenue (compared with 19% in 2012), standing at 33% in the US (31% in 2012).

Key highlights in the UK including Sylvia Day's Entwined with You, Marian Keyes' The Mystery of Mercy Close, John le Carre's A Delicate Truth, Daniel Kahneman's Thinking, Fast and Slow and Charles Moore's Thatcher. In the US, Khaled Hosseini's And the Mountains Echoed and Charlaine Harris' Dead Ever After were also highlights.

Penguin and DK were said to have grown their children's businesses globally, with DK growing market share globally boosted by its LEGO publishing.