Pearson reported sales for Penguin for the
last time, covering the first six months of 2013, right up to the creation of
Penguin Random House. The trade publisher had a strong start, with books from
Khaled Hosseini and Sylvia Day helping to power a 16 percent overall (and 6
percent underlying) growth in sales, to £513 pounds, up from £441 a year ago
(which had been a weak report for Penguin). Adjusted operating profit rose £6
million, to £28 million for the period -- but that was more than wiped out by
£46 million in "costs relating to the formation of Penguin Random
House."
As was the case in the last reporting
period, a substantial portion of that amount -- probably about 70 percent,
though the company did not provide a breakdown -- is due to the additional
damages, fees and costs Penguin agreed to pay in settling the ebook pricing
lawsuit. Six months ago Pearson took a £32 million charge, of which $40 million
was attributed to the suits. The final settlements cost over $90 million in
payouts.
Former Penguin Group ceo -- and now
chairman of the board Penguin Random House -- John Makinson confirmed that
Pearson will continue to incur "further restructuring costs" related
to the merger and the complete "disengagement" from a variety of
shared Pearson services "will take us certainly into 2014 and in some
places into 2015." Makinson officially stepped down from the Pearson board
on July 1 and is focusing on his new role as "independent chairman"
of the new Penguin Random House. He recently returned from the world tour of
Penguin Random House offices with ceo Markus Dohle.
In their last internal memo on Penguin US
sales alone, David Shanks and Susan Petersen Kennedy note that "2013 has
been characterized by disruption and distraction," but the company's
"first-half performance proves that you learned from the disruptions and
tuned out the distractions.... You made the books work, despite everything."
As for the merger preparations in particular, "Enlivened and perhaps
empowered by a glimpse into the future, you rose to the occasion and surpassed
our expectations." On the results themselves, "Penguin US had a great
first half. Net sales were up over last year by double digits, and that growth
was driven by all segments of the business (frontlist, backlist, and digital)
and all publishing groups (hardcover, paperback, and young readers)."
Makinson indicates the company's units
performed well all over, "even in markets we know are quite tough"
such as Australia and South Africa, and he said that recently acquired Author
Solutions "is coming along well" (despite pending legal action
against the unit). They are no longer forecasting future performance
post-merger, though Shanks and Kennedy indicated "a strong start to the
second half" in their letter and Makinson "sees no reason why"
Penguin's positive results "shouldn't remain the case in the second half
of the year."
The company declares in the release that
"ebook revenue grew strongly" though the numbers confirm the same
greatly diminished growth rates that are being reported across the industry.
eBooks comprised 21 percent of worldwide sales (up about 10 percent from a year
ago, when they account for 19 percent) and 33 percent of sales in the US (up
only 6.5 percent, from 31 percent a year ago).
On some of the confusion around whether US
accounts have shifted completely to new ebook sales terms with Penguin as a
result of the legal settlements, Shanks indicated they "are still not
finalized on a lot of our new contracts" but expects that will happen
"within the next month or so." (So Penguin may still be actually
setting the price with some accounts, though those accounts are free to
exercise their right to offer discounts even in advance of new contracts.)
Overall, Pearson's sales rose 7 percent to
£2.76 billion on strong education sales, but adjusted operating profit fell by
£50 million to £137 million on continuing restructuring costs and new product
investments, and the company reported a rare statutory loss of £9 million, or
one pence per share. Sales were well ahead of analysts' expectations, and
Pearson's stock is up over 5 percent today as a result, reaching its highest
point in years.
Pearson results
And over at PW
Independent Penguin Goes Out on High Note
No comments:
Post a Comment