25th Apr 2014 07:59
LONDON (Alliance News) - Pearson PLC maintained its full year adjusted earnings per share guidance for 2014, as it said it had seen a "solid start to the year" in a statement ahead of its annual general meeting Friday.
Pearson continues to expect adjusted earnings per share of between 62 pence and 67 pence in 2014, taking into account continued cyclical and policy-related pressures in the US and UK, its restructuring plans and product investment.
The company said that, as it had expected, its first half adjusted operating profit and adjusted earnings per share will be lower than in 2013. This is as a result of the costs of merging its Penguin books unit with Random House Inc, as well as the appreciation of sterling. It expects its profits to be heavily weighted towards the second half.
The Financial Times owner also sold its Mergermarket business last November.
In the first quarter to end-March, sales rose 2% at constant exchange rates, 1% on an underlying basis, to GBP900 million excluding Penguin and Mergermarket. However, on a reported basis, sales dropped 6%, it said, hit by the appreciation of the sterling against the US dollar and other currencies. Pearson makes around 60% of its sales in the US.
In North America, the company benefited from sales in December being deferred into January, good growth in its digital and services business, and later second semester purchasing in higher education. All key regions in its Growth markets started the year well, Pearson said.
However, The UK was weak due to the timing of assessments and qualifications.
Within its Professional business, growth in assessment volumes at Vue and digital subscriptions at the Financial Times partly offset advertising declines at the Financial Times, Pearson said.
The company is undertaking a restructuring and product investment programme in 2014, which it hopes will accelerate its shift towards digital services and fast growth economies.
"Our major programme of restructuring and investment is on-track and will drive a leaner, more cash generative, faster growing business from 2015," said Chief Executive John Fallon in a statement.
Broker Numis maintained its hold rating for Pearson, saying the first quarter statement provided "no surprises". Numis made no alterations to its estimates, but noted that currency was an continuing headwind.
Liberum maintained its Sell rating, saying that it continues to believe a strong bounce-back for Pearson in 2015 "just will not happen".
Liberum highlighted structural headwinds at Pearson's North American education business, and declining textbooks and material sales in higher education. Although Perason has made several profit warnings from the start of 2013, Liberum said, it has not been significant de-rated due to hopes that it will bounce back in 2015.
"If, as we expect, this does not occur, we would expect a significant de-rating," Liberum said.
Shares in Pearson were trading up 2.2% at 1,072.89 pence, the biggest gainer on the FTSE 100.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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