Pearson hit by 41 per cent fall in profits at Penguin

A Dramatic change in American reading habits contributed to a 41 per cent fall in profits at Penguin, the publishing house owned by the media group Pearson, which announced annual results yesterday including a rebound in the fortunes of the Financial Times and growth at its core education publishing business.

Pearson also announced that its chairman, Lord Stevenson, will retire later this year. His departure will end an eight-year partnership at the helm of the company alongside Dame Marjorie Scardino, the group's chief executive, who was appointed in January 1997 just four months before Lord Stevenson took up the chairmanship.

Pearson shares fell 2.15 per cent yesterday to 638p - the same price as when Lord Stevenson became chairman in May 1997. Overall, Pearson reported a 3 per cent rise in sales in 2004 to £3.9bn, ignoring the impact of a weakening dollar, while operating profit was up 5 per cent to £455m.

Its core business of education publishing saw sales up 4 per cent to £2.4bn and operating profits up 5 per cent at £293m.

However, Penguin was beset by numerous problems during the year, including distribution headaches in the UK and the impact of a weakening dollar. It was also taken by surprise by changes in American mass-market, book-buying habits.

The book publisher's sales fell from £840m to £786m, while operating profits fell from £91m to £54m. The weakening dollar hit Penguin's profits by £14m and adjusting for this, underlying operating profits were down 24 per cent. Demand for mass-market fiction in the US fell 13 per cent in the second half of last year, including a 33 per cent decline in December. Dame Marjorie said this reflected growing demand for "premium paperbacks" - typically sold at $9.99 (£5.20) - that were more legible, printed on higher-quality paper and with more distinctive cover designs than mass-market books retailing in airports and supermarkets at $7.99 or less.

The FT Group, which includes the Financial Times, saw a 69 per cent increase in operating profit to £86m, while underlying sales at the business newspaper division rose 3 per cent to £587m. The FT itself recorded a loss of £9m but it made a profit in the fourth quarter of the year. In 2003, the paper made a loss of £32m.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea