Total sales at Pearson's different publishing groups—Penguin, education and professional—rose 2.7% in 2007, to £3.53 billion ($7.06 billion), while adjusted operating profits increased 6.4%, to £478 million ($956 million). Excluding currency translation, gains in sales and earnings were higher. At the Penguin Group, Penguin USA led the increase in sales and earnings; sales in the U.K. were flat and were slightly down in Australia and at DK. Sales at DK were hurt by a weak year at Brady Games.

Penguin USA CEO David Shanks noted that profit improvement was helped by a reduction in returns, particularly hardcovers, as well as some cost savings on the production side. Earnings also benefited from solid top-line growth driven by big gains in the adult hardcover group and in the trade paperback division. Backlist sales were also up, though sales in the children's group, coming off a strong 2006, were flat. Sales in the audio group were up 31%. Eat, Pray, Love, with 4.5 million copies shipped, was the big book in the year, and other million-copy sellers in the U.S. included A Thousand Splendid Suns, The Memory Keeper's Daughter, Three Cups of Tea and The Kite Runner, while Alan Greenspan's The Age of Turbulence, has shipped one million copies worldwide.

Penguin USA is off to a strong start in 2008, led by the Oprah pick A New Earth by Eckhart Tolle. Penguin has shipped 3.45 million copies of the title.

In the school segment, sales in the U.S. textbook publishing unit rose 3.5%, while test sales increased by more than 10%. The company did well in all the major subject areas—reading, math, science and social studies. Sales in the international school segments rose at a faster rate in the U.S., and Pearson's share of that market will increase in 2008 following its purchase of Harcourt's international businesses; similarly, its stake in the test market will expand with its acquisition of Harcourt Assessment.

Higher education sales rose 6% in the U.S., offsetting slower growth in international segments. Pearson said the group had rapid growth in its online learning and custom-publishing operations.

Looking to 2008, Pearson said it expects Penguin's profit margins to go over 10%, while sales in the school division will be well up in the high double digits. Excluding the Harcourt purchase, sales will be up in low single digits. Underlying growth in higher education is expected to be in the mid single digits.

Pearson Publishing, 2006—2007 (in millions £)

2006 2007 % chge
Sales £848 £846 -0.2%
Adjusted operating profit 66 74 12.1
Sales 1,455 1,537 5.6
Adjusted operating profit 184 203 10.3
Higher Education
Sales 795 793 -0.2
Adjusted operating profit 161 161 0
Sales 341 354 3.8
Adjusted operating profit 38 40 5.3
Sales 3,439 3530 2.7
Adjusted operating profit 449 478 6.4