It's usually great news when a company's annual earnings report announces a double-digit rise in sales, especially in a terrible economy. But the preliminary 2009 earnings report for Pearson PLC (PSO), London-based owner of the Financial Times and trade-book publisher Penguin, comes with a huge caveat.

The report, released this morning, shows that Pearson's 17% sales boost last year, to $8.4 billion (£5.6 billion), owes itself primarily to the weak performance of the British pound. With the exchange rate factored in, overall company sales grew 4%, and operating profit also grew modestly, to $1.3 billion (£858 million).

It's a Pyrrhic victory, subject to the whims of the global market more than any of the other Big Six publishers. Still, the company can take heart in the bona fide success of its Pearson Education division. North American sales grew 23%, to $3.7 billion (£2.5 billion), and adjusted operating profits were up a third to $604 million (£403 million).

At Penguin, sales jumped 11% in 2009 to $1.5 billion (£1 billion), but again, the vast majority of that gain came from the pound's performance. (The constant exchange rate declined 1%, and underlying results were down 2%.) More telling is that Penguin's adjusted operating profit was $126 million (£84 million), a 17% drop on a constant-exchange-rate basis, and 19% on an underlying basis. Take the exchange rate out of the equation, and Penguin's sales were actually flat, and margins declined across the board (except for e-books, which grew more than 300%).

The Financial Times Group saw 2009 sales up 6% to $1.3 billion (£842 million), though that number was down 3% when adjusted for the currency exchange, and the underlying results were down 5%. Adjusted operating profit dropped 4% to $280 million (£187 million), and with currency exchange factored in, that number dropped 12%, with the underlying results down 14%.

"We seized the big opportunity to take share in a tough climate," chief executive Marjorie Scardino said in a statement, "and we increased sales and profits while investing heavily in the future. We're ready to keep growing, because we're the leader in dynamic markets where there is great demand for learning, skills, and information. We don't expect any help from the economy anytime soon, but we can rely on the 37,000 people in Pearson who continue to deliver, year after year."

The FT Group also declared a final shareholder dividend of 35 cents (23.3 pence) per share, taking the total for 2009 to 53 cents (35.5 pence). That compares with 51 cents (33.8 pence) in 2008. The results beat investors' expectations.

Pearson expects Penguin this year to "post another good competitive performance" in the context of a market it expects to remain "broadly level." The trade publsher will also benefit from efficiency actions taken last year, and "its leading position in the emerging market for eBooks": Not only did 2009 sales quadruple, but the publisher now has 14,000 titles available electronically (10,000 on the North American side.)


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