Book group revenues at Pearson inched up by less than 0.5% in the first half of 2002, to £1.42 billion ($2.01 billion), and operating profit fell 12%, to £57 million ($87 million), but executives said they were satisfied with first-half results and expect a stronger performance in the second part of 2002.
Total revenues at the Penguin Group fell 2%, to £394 million ($571 million), but operating profit rose 3%, to £38 million ($55 million). Both Penguin Putnam CEO David Shanks and Penguin Group chairman John Makinson said they were pleased that Penguin Putnam and the Penguin Group were able to nearly keep pace with last year's sales performance, since most of the group's biggest titles are set for release in the second half of the year. "We did very well. We were ahead of plan for the first six months and are on target to meet our second-half goals," Shanks told PW. Penguin Putnam's growth was led by a strong frontlist. Shanks said, "The story was bestsellers. The books hit the bestseller list and stayed there."
Penguin Putnam and the entire Penguin Group benefited from improved Dorling Kindersley results; DK broke even on sales of £71 million. Makinson noted that the "injection" of DK into the Penguin Putnam sales organization provided a significant boost in sales, due to the Penguin sales team's ability to penetrate new market channels. Makinson predicted that sales for the Penguin Group will increase by about 10% in the last six months of 2002, giving the group a mid-single-digit gain in sales for the entire year. Earnings are expected to rise by double digits, due in large part to the turnaround of DK from a $10-million loss last year to a $10-million profit this year.
At Penguin Putnam, Shanks is expecting an especially good performance from the children's group, which has a strong list and should double the number of bestsellers (six) that it had in the first half of the year. Penguin's adult hardcover list includes new works from Tom Clancy, Patricia Cornwell, Robin Cook, Ken Follett and Robert Parker.
In the education group, total revenue rose 1%, to £1.03 billion ($1.49 billion). Operating profit fell 34% to £22 million. Gains in the college and professional divisions offset revenue declines in the school and international divisions.
School division sales fell 8% in the period, to £393 million, due to fewer adoption opportunities. Pearson Education chief executive Peter Jovanovich said he expects a good second half for the unit led by its testing business. Sales in the college division rose 15%, to £158 million, with the division helped by early ordering from some retailers and a good start from its custom-publishing operation. Jovanovich said the college division could have its best year in a decade, with sales for the full year up by as much as 10%.
Sales in the professional division rose 17%, to £232 million, as growth in the professional certificate and government businesses offset soft sales to training markets. International sales were off 3%, to £242 million. The school and college divisions were up, but sales were down in the IT business.
