4th Mar 2019 18:30
LONDON (Alliance News) - Moody's Investors Service on Monday changed the outlook on FTSE 100 publisher Pearson PLC to stable from negative.
Concurrently, Moody's has affirmed Pearson's Baa2 senior unsecured ratings.
The rating agency's decision to change Pearson's rating outlook to stable reflects Pearson's "healthy credit metrics" driven by its conservative balance sheet management in a challenged revenue growth environment, Moody's said.
Furthermore, Moody's noted Pearson's "steady progress" against its strategic priorities and an
underlying improvement of 8% in its adjusted operating profit in 2018, helped by a cost efficiency program which is running ahead of plan.
"In the backdrop of muted topline performance, Pearson continues to remain focused on improving its profits in 2019 via implementing its cost efficiency program, maintaining low debt leverage and positioning its business for growth by implementing its strategic priorities," said Moody's Senior Credit Officer and lead analyst for Pearson Gunjan Dixit.
Dixit added: "While Pearson's underlying revenue declined in 2018 by 1% due to the worse than expected performance in US higher education and K-12 and UK qualifications, the company has guided that it is on a path to return to revenue growth in 2020, helped by the good execution of its strategic growth opportunities."
Moody's added that Pearson's Baa2 rating could come under downward pressure should the underlying operating environment not improve in line with company plans.
Upward rating pressure is currently "very limited", Moody's added, given the challenging
operating environment.
Pearson's shares closed up 0.2% at 842.80 pence each.
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