Penguin Profits Soar-26%, Margins Improve

March 5, 2009
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MAIN NEWS HEADLINES
March 5 – March 12, 2009 Edition

Penguin Profits Soar
26%, Margins Improve

NEW YORK, NY/Authorlink News/03/02/09–Penguin Group, the international publishing company, today announced record profits for 2008, representing growth of 26% over the previous year. The company achieved a profit margin of 10.3%, meeting its commitment to a double digit margin in 2008. Sales rose 7%. This exceptional performance was achieved in spite of one of the most challenging retail environments in recent times.

The strengthening of the dollar in the course of the year boosted both the sales and the profits of the company in sterling terms but, even on an underlying basis, sales were up by 3% and profits showed growth of 4%. These numbers were all struck after a profit charge to reflect liquidity issues in the UK at the Woolworths Group. The improved profitability was the result of a company-wide focus on margin improvement through operational efficiency, consistent and disciplined investment in author and product development and the development of a globally coordinated publishing organization benefiting from worldwide scale. These strong Penguin results were part of an excellent overall Pearson performance in 2008: Pearson 2008 Preliminary Results.

John Makinson, Chairman and CEO, Penguin Group, stated, “We are hugely proud of Penguin’s performance in 2008. In a very difficult market for consumer books, which deteriorated progressively during the year, Penguin achieved outstanding growth in sales and profit allowing us to meet our longstanding commitment to a double digit profit margin. This performance was underpinned by exceptional publishing around the world which we expect to continue in 2009.”

David Shanks, CEO, Penguin Group (USA), commented, “Penguin Group (USA) had a very strong year in 2008. We exceeded our full-year targets and outperformed the overall market – an accomplishment that is extremely gratifying in such challenging economic times. Led by Eckhart Tolle’s A New Earth, Greg Mortenson’s Three Cups of Tea and Patricia Cornwell’s Scarpetta, we had one or more #1 New York Times bestsellers 94% of the year, and we were the industry leader in #1 New York Times adult bestsellers across all formats. Our authors won two Pulitzer Prizes and we continued digital innovation. Looking ahead to 2009, we have an exceptional publishing list and are well positioned to have another good year.”

Penguin Group (USA)’s excellent results in 2008 were driven by outstanding publishing programs, a strong bestseller performance, significant sales growth in its trade paperback and mass market units, a successful return on investment in its digital and audio businesses, and a string of new hits in the Young Readers division that attracted a record number of young readers online. Penguin Group (USA)’s success reflects the soundness of its overall strategies and the strength of its execution. Below is an overview of the Group’s full year achievements for 2008.

PENGUIN GROUP (USA) DELIVERS A STRONG #1 BESTSELLER PERFORMANCE

Penguin Group (USA) led the industry with one or more #1 New York Times bestsellers 94% of the year and was the industry leader in #1 New York Times adult bestsellers across all formats. Here are additional bestseller achievements for 2008:

G. P. Putnam’s Sons was again the #1 New York Times bestselling hardcover imprint, a position it has held for more than two decades. Penguin Group (USA) led the industry in overall total of #1 New York Times trade and mass market paperback books. Penguin Group (USA) delivered #1 New York Times bestsellers across 13 imprints.

II. PENGUIN GROUP (USA)’S DIGITAL BUSINESSES GROW

Over the last several years, improved technology has made books more accessible online to mainstream America. Sales of Penguin Group (USA)’s eBooks have surged as the company has invested in making 6,400 books available on many electronic reading devices including the iPhone, developed online eBook stores, and published exclusive new content in eBook form. The company also launched an original digital program, Penguin 2.0, which offers consumers the unique opportunity to customize books, among other online services and features.

Penguin Group (USA):

Saw its eBook sales jump close to 500% over 2007. Has 6,400 eBooks now available in the US; 8,500 total eBooks across the Group. Was the first publisher to create an iPhone app for optimal viewing of its website on mobile devices. Launched a line of eSpecials, short pieces of writing encompassing everything from updates to nonfiction works to unpublished novellas by bestselling authors. Opened Enriched eBook Classics stores on Amazon and on the Penguin Group (USA) website. Saw its website traffic climb 10% to 3.5 million unique visitors. Launched the second annual Amazon Breakthrough Novel Award with Amazon.com.

PENGUIN GROUP (USA)’S ECKHART TOLLE AND GREG MORTENSON MAKE PUBLISHING HISTORY AND CHANGE THE WAY WE LIVE

Penguin Group is one of the world’s few truly global publishers, and has been successful in reaching readers all across the globe with universal stories that transcend boundaries. In 2008, two of the industry’s biggest global news stories were the launch of Eckhart Tolle’s A New Earth, and Greg Mortenson’s Three Cups of Tea, which has become a global publishing phenomenon.

Eckhart Tolle’s A New Earth, the 61st Oprah’s Book Club Selection, was a global bestseller for Penguin Group, published in the English language in each of Penguin Group’s nine territories. For the first time ever, readers around the world were able to participate in a free, live interactive classroom discussion, led by Ms. Winfrey and the author. The 10-part interactive worldwide web event was a pioneering venture that reached an unprecedented number of readers globally. To date, more than 6 million copies of the book have been shipped in the U.S. The book debuted at #1 on The New York Times Advice, How-to and Miscellaneous bestseller list, and stayed in the #1 position for over six months, with 50 weeks on the list overall. Greg Mortenson’s Three Cups of Tea was another worldwide phenomenon for Penguin Group, with editions published in the US, Canada, UK, Australia, New Zealand, and South Africa. The book spent every week of the year in 2008 on The New York Times nonfiction paperback list (108 weeks in total), and was in the #1 position for 28 weeks. To date, more than 2.6 million copies have been shipped, and sales continue to climb. In January 2009, Penguin Group (USA) published young readers’ adaptations of the book, in what was a successful cross-division publishing strategy that captured a whole new generation of readers with Mortenson’s universal story for all ages. Three Cups of Tea: Young Readers Edition (for ages 8-12 years) and the picture book, Listen to the Wind, surged to the top of The New York Times bestseller lists, hitting #1 simultaneously for the week of February 15th.

PENGUIN GROUP (USA) AUTHORS WON TWO PULITZER PRIZES IN 2008

Among a host of other awards and distinctions received in 2008, two Penguin Group (USA) authors were honored with the prestigious Pulitzer Prize, adding significantly to Penguin Group (USA)’s distinguished publishing legacy. Junot Díaz and Barton Gellman join the ranks of Penguin Group (USA) authors Steve Coll and Geraldine Brooks, who won a Pulitzer in 2005 and 2006, respectively.

Junot Díaz’s The Brief Wondrous Life of Oscar Wao (Riverhead) won the 2008 Pulitzer Prize for Fiction. The Penguin Press’ Barton Gellman, author of Angler, also took home a Pulitzer for National Reporting.

PENGUIN GROUP (USA)’S AUDIO PROFITS CLIMB, GROSS SALES UP 17%

Penguin Audio had its most profitable year to date in 2008, with gross sales up 17%. It was also an award-winning year: Penguin Audio received five “Listen Up” Awards – the most the group has ever received in one year; and eleven “Earphone” awards for excellence in narration, given by Audiofile magazine, the only magazine dedicated to audio book reviews.

VII. PENGUIN GROUP (USA)’S #1 BESTSELLING AUTHORS, KHALED HOSSEINI AND KEN FOLLETT, NAMED MOST POPULAR AUTHORS IN THE WORLD

Riverhead’s Khaled Hosseini, author of The Kite Runner and A Thousand Splendid Suns, and Dutton’s Ken Follett, author of The Pillars of the Earth and World Without End, have been recognized as the most popular writers globally, according to analysis of the 2008 international fiction bestseller lists published by book trade magazines, including The Bookseller (UK), Publishers Weekly (US) and Livres Hebdo (France). Hosseini and Follett are the only two authors in the world to have books in the Top 10 fiction lists in seven of nine countries where data was charted. In total, the analysis tallied 387 writers in the Top 10 fiction charts of the nine countries included-France, Germany, Italy, the Netherlands, China, Spain, Sweden, the UK and the US.

PENGUIN GROUP (USA)’S INVESTMENT IN A “GREENER FUTURE”

Penguin Group (USA)’s longstanding commitment to green programs resulted in new milestones reached in 2008:

Penguin Facilities Increases Use of Wind Power – Penguin Group (USA) was one of the first companies in the state of New York to use wind as a source of energy. This began a decade ago and continues today. Wind power now comprises 20% of the energy used at Penguin’s warehouses – up 10% over 2007. Penguin Classics Plants More Than a Million Trees with The Nature Conservancy – Penguin Classics continues to support the Nature Conservancy’s Plant a Billion Trees campaign with major marketing, publicity, and in-store promotions that increased public awareness and participation. The program has already planted 1.4 million trees in Brazil. Penguin Has Reduced Paper Usage by 25%: Penguin employees strive every day to reduce the company’s carbon footprint. Through increased use of scanners, digital workgroups, and the use of Sony Readers and Amazon Kindles, Penguin has reduced its annual paper consumption.

PENGUIN GROUP WORLDWIDE

Around the world, Penguin Group delivered a very strong performance in all its major markets, recognized by an array of awards, including Publisher of the Year awards in Canada and Australia and Trade Publisher of the Year in South Africa.

In the UK, Penguin’s performance was driven by outstanding bestseller performance with 67 titles in the Bookscan top ten versus 52 last year. Sebastian Faulks’ Devil May Care, which became Penguin’s fastest selling fiction hardback in its history, and Marian Keyes’ This Charming Man, were two of the biggest selling hardback novels across the industry in 2008 (3rd and 14th respectively on Bookscan).

On the nonfiction side, Jamie’s Ministry of Food sold well over half a million copies through Bookscan, making him the second biggest publishing franchise of the last decade in the UK. Penguin Classics had its best ever year with year-on-year growth of 15%. 2008 also saw the publication of Penguin Classics in Mandarin Chinese and Korean. Penguin accounted for more than 12% of market share in children’s publishing. The Brands and Licensing division had a stand-out year with fantastic performances from their media franchises, including In the Night Garden (5.8 million copies sold to date).

2009 has started well in the UK with Jamie Oliver occupying the top slots from the start with both Ministry of Food and his Red Nose Day tie-in title. Looking ahead, Penguin has a stellar publishing line-up around the world

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