Citing continued benefits from the integration of Penguin and Random House, Pearson said its 47% stake in the world’s largest trade publisher earned 129 million pounds ($136 million) in operating profits for the company in 2016. The sum marks a 43% increase over 2015. The profit improvement came in spite of a decline in revenue at PRH for the year.
Pearson said the sales slippage at PRH reflected difficult comparisons to an extremely strong 2015, as well as continued declines in e-book sales in 2016. Somewhat offsetting those trends were higher sales of print books online, and strong sales of audiobooks.
Pearson, which earlier this year announced plans to sell its share in PRH, said it expected the trade publisher to have "a broadly level publishing performance" in 2017.
PRH’s performance was a bright spot for Pearson which released, as expected, weak overall revenue and earnings for the year. Although revenue rose 2%, to 4.55 billion euros, excluding extraordinary items, revenue was down 8%. Adjusted operating profit fell 21%, to 635 million pounds. The company also took a huge write-down of 2.5 billion euros, which led to a loss of 2.3 billion pounds.
Citing a problem it has been voicing some time, Pearson blamed the poor performance on declines in its U.S. assessment and school divisions and a "much worse than expected decline in North American higher education courseware."
To improve profits in the future, Pearson said its restructuring program, aimed at saving 425 million pounds annually, has been completed. The priority for 2017, Pearson chief executive John Fallon said in a statement, is to "accelerate our digital transformation, simplify our portfolio, control our costs, and focus our investment on the biggest growth opportunities in education."
