24th Jan 2014 17:38
LONDON (Alliance News) - Ratings firm Moody's Investor Service late Friday lowered its outlook on Pearson PLC's Baa1 debt ratings to negative from stable.
Moody's said it has changed the outlook on the financial and education publisher's Baa1 long-term issuer and senior unsecured ratings. At the same time, the rating agency affirmed the Baa1 ratings and the P-2 short-term rating.
The rating outlook change comes a day after Pearson issued a second profit warning for 2013, citing tough trading conditions throughout the year, and a weaker-than-expected performance in the US and the UK, especially from its North American higher education business.
"Pearson faced tough market conditions throughout 2013 as cyclical, policy-related and structural pressures affected our education publishing and assessment businesses in North America and the UK, our two largest markets," Pearson said in its trading update Thursday.
Pearson said Thursday it expects earnings and profits for the year ended December 31, 2013 to be significantly lower than the previous year.
"We are changing the outlook to negative as Pearson's debt protection metrics for fiscal year 2013 are likely to weaken considerably," said Moody's Assistant Vice President-Analyst Gunjan Dixit in a statement commenting on the ratings outlook change.
"Pearson's trading conditions are also likely to remain challenging for the next year and as a result we don't expect its credit metrics for 2014 to improve compared to 2013," Dixit added.
Shares in Pearson dropped after it released its trading update Thursday, and continued to trade lower Friday, closing down 1.2% at 1,176.62 pence per share after the market close.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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