PW: Pearson Book Publishing Sales Hit $1.8 Billion in 1997

The sales and profit increase was led by the Penguin group, where sales rose 38.2%, to $871.5 million, due in large part to the inclusion of Putnam. Profits increased at an even more impressive rate, 126%, to $95 million. Michael Lynton, Penguin chairman, attributed the gain in profits to the integration of such back office operations as purchasing, freight and sales. Lynton said that most of the integration of the two companies has already taken place, although some warehousing issues still need to be addressed. In addition, the Putnam staff is set to move to Penguin's headquarters in lower Manhattan this summer.

Lynton told PW that sales were up in Penguin's American U.S. operation, led by Putnam, which had "an extremely strong year." Sales at Penguin were down slightly, largely due to the absence of a new Stephen King book and Oprah's picks. Results in Penguin's U.K. and Australian subsidiaries were up, Lynton said, adding that sales for the entire company have gotten off to a good start in 1998.

The results at Addison Wesley Longman were disappointing. In a year when elhi sales rose 13% and college sale gained 7.4%, revenues at AWL increased only 1.7% to $934.5 million, while operating profits inched up by less than 1% to $100.4 million (although Pearson said AWL had "underlying profit growth of 8%" after taking into account the impact of adverse exchange rates and the timing of the HC purchase). Pearson said that although restructuring charges in 1997 were lower than in 1996, they remained "significant" as the new management team, led by Peter Jovanovich, "sets about improving the competitive edge of the business and reducing operating costs."

According to Pearson, restructuring costs and higher obsolescence in the U.S. school division were partially offset by cost savings achieved through the integration of HC Educational. On the positive side, Pearson said its new elhi math program is off to an encouraging start, while its college division reported a 35% increase in new product signings.

Pearson also reported that Mindscape had a profit of $2.6 million last year, following a loss of $76 million in 1996. Pearson agreed to sell Mindscape to The Learning Co. earlier this month (News, Mar. 16).