Penguin and Pearson Earnings: Profits More Than Double So Far in 2010
Penguin said the increase in margins is "the result of a strategy of targeted and sustained investment in publishing, digital change and reorganization." The report goes on to cite "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." The British pound, whose value has dropped to around $1.55 compared to $1.65 last year, also proved a major factor.
Overall, the Pearson Group saw sales growth of 9% to £2.3 billion ($3.6 billion), with adjusted operating profit up 79% to £178 million ($276 million). The company's education division sales rose from £446 million ($691 million) to £504 million ($781 million), 11% growth at constant exchange rates, with adjusted profits up from £23 million ($36 million) to £36 million ($56 million). In the U.K. 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."
Meanwhile, the Financial Times Group, which benefited from an uptick in advertising revenue, reported an earnings rise of of 7% to £192 million ($298 million) and adjusted operating profits that more than doubled from £14 million ($22 million) to £30 million ($46 million) in the first six months of the year. Digital readership grew 27% to 149,000 compared to a year earlier, and registered users of FT.com climbed 77% to 2.5 million. The Financial Times has also had almost 250,000 downloads of its iPad application.
"The 2010 finish line isn't yet in sight, but this is as good a start to our year as I've seen," said Pearson CEO Marjorie Scardino in a statement. "That boosts our confidence in the full year, enabling us to brighten our outlook and raise our guidance. We've invested consistently in global and digital education and information and that's helping every part of Pearson grow strongly, even in uncertain markets." Looking ahead, however, Scardino says "there is much to be cautious about. Pearson generates only a small proportion of its profits in the first half; we face tougher comparables as we go through the year; and the macroeconomic environment remains very uncertain."