Pearson First-Half Profit Higher, Raises Education Sales Forecast
Book and newspaper publisher Pearson reported a sharp rise in first-half profits on Monday and raised its full-year sales forecast for its core professional education business to growth of 5-7%.
Pearson Chief Executive Marjorie Scardino told reporters in a conference call the upward revision was due to a "burst in growth" in U.S. clients signing up to professional testing services in areas such as school entrance exams, medical tests for nurses and securities exams for dealers.
The company, which also publishes the Financial Times newspaper, had previously forecast flat sales for the professional education business.
Shares in Pearson were 1.3% higher at 780 pence in early trading, outpacing a 0.3% rise in the DJ StoxxEuropean media index.
Pearson also increased its full-year headline revenue growth forecast for its IDC business to 10-12 % from 6-9% previously. Pearson has a majority stake in U.S.-listed market data provider Interactive Data Corp.
In the first half of the year underlying education sales rose by 7% and moved into a first-half profit of 5 million pounds. FT Group revenue rose 8 % with profit up 28% while Penguin revenues increased 1% and profits 11%.
Pearson said its first-half adjusted operating profit from continuing operations rose 47% to 91 million pounds from 62 million pounds a year ago with adjusted pretax profit up at 54 million pounds from 31 million pounds.
Group revenue rose to 1.72 billion pounds from 1.674 billion, compared with an average Reuters Estimates forecast of 1.67 billion pounds. The revenue forecast was based on a poll of 10 analysts and came inside a 1.643-1.699 billion pound range.
Pearson said the 6% rise in the interim dividend to 11.1 pence, reflected its financial performance and outlook.
"The markets in which Pearson operates remain buoyant and the group continues to perform well within them," said Numis Securities in a research note.
Pearson said that although headline results will be affected by the weak dollar it is confident 2007 will be another good year for the company as it lifts margins and grows faster than the markets it operates in.
The company generates around two thirds of its sales in the United States. The majority of profit comes in the second half.
Scardino said the sale of its French business newspaper Les Echos was progressing in an orderly manner.
Exclusive Talks in Luxury Goods
The London-based company has entered exclusive talks with luxury goods group LVMH to sell Les Echos for 240 million euros, an offer that has triggered protests by the paper's journalists and a rival 245 million-euro bid from French holding company Fimalac.
Scardino said there were no implications from Les Echos for Pearson's other newspaper assets such as the Financial Times.
"Les Echos is a mostly print company and our strategy is now mostly digital. Les Echos needs a national strategy and our strategy is now global," Scardino said.
The Texas-born chief executive said that the move by News Corp Rupert Murdoch to buy publisher Dow Jones for $5 billion was likely to bring more competition into the industry.
"No intelligent business person would ever be sanguine about competitors and we are certainly not," Scardino said.
A number of analysts have said Murdoch's pitch for Dow Jones may prompt Scardino, who noted back in 2002 that the sale of the Financial Times newspaper would only happen "over my dead body", to reassess her position about keeping the business.
"Back then I said that to get you all to stop asking that question and it didn't work," she said.
Pearson has regular dialogue with its shareholders and "they know where we are going with (the FT) and so I think that is the kind of dialogue we have and I am happy with it," Scardino said.