In reporting its last results as an independent publisher Penguin Group posted a 16% gain in sales, to 513 million pounds, and a 27% rise in adjusted operating profit to 28 million pounds. Favorable exchange rates helped the increase, but even without the currency bump sales were up 6% and profits 14%. John Makinson chairman of Penguin Random House and former chairman of Penguin Group, said all operating units did well in the first six months, although he acknowledged that the first half of 2012 had a much weaker publishing schedule than the most recent period. Still, Makinson said while the strong results were a bit bittersweet given the merger with Random House, everyone at Penguin was “very happy” to conclude Penguin’s run as an independent publisher with “excellent results.”
The U.S. had a particularly strong first half with sales up by more than 10%, a result that reflected gains in frontlist, backlist and digital areas and in hardcover, paperback and young readers. David Shanks, former Penguin USA CEO and now a senior advisor to PRH, said he was “very proud” of everyone at Penguin for putting behind the distractions of the Department of Justice investigation and the pending merger to turn in such a strong performance. “There couldn’t be a better way to turn over the company to a new management group,” Shanks said.
All parts of Penguin USA clicked in the first half, he said, with digital sales increasing faster than AAP averages and accounted for 33% of sales in the six-months, up from 31% in the comparable period in 2012. For all of Penguin, e-book sales were 21% of revenue, up from 19%, with sales growing strongest in the U.K. In some other countries, such as Australia, e-book sales are started to show faster growth, but from still low levels, Makinson said.
Shanks noted that in addition to digital, Penguin made a strong push to support its print titles, pointing to the success of its Indie Partnership Program. The program, which began as an 18-store test, now has 238 indie bookstores enrolled, which had led to increased sales for all areas of Penguin. While the overall mass market paperback market has seen slowing sales, Shanks said Penguin’s mass market business continued to be able to grow authors into successful hardcover authors. Spanish has been another area Penguin has pushed and sales at Penguin en Española jumped 183% in the first half. Penguin's children's group also did well, and with a strong second half list, Shanks said the investment in building a team around children's head Don Weisberg "has really paid off."
In presiding over the last chapter of Penguin’s storied history, Makinson said he had no second thoughts about doing the deal with Random House. Earlier in the week, Makinson told PW, he met with the Pearson board and told them “you should be proud of what you agreed to do,” saying that after spending time with Random House employees he was even more convinced the board “did the right thing with the right people.”
