22nd Feb 2019 07:39
LONDON (Alliance News) - Educational publisher Pearson PLC hiked its dividend Friday after annual profit performance improved significantly amid cost-cutting progress, slightly beating economist estimates.
Pearson also provided upbeat guidance.
In 2018, pretax profit widened 18% to GBP498 million from GBP421 million the year prior. This was despite reported revenue falling 8.4% to GBP4.13 billion from GBP4.51 billion the year before.
According to consensus estimate figures compiled by Vuma, analysts had expected Pearson to report GBP496 million pretax profit on revenue of GBP4.19 billion, so it beat slightly on profit but missed a little on revenue.
Profit performance in 2018 was helped by a sizeable fall in operating expenses to GBP1.91 billion from GBP2.20 billion the year prior.
Although reported revenue saw a significant fall in 2018, on an underlying basis it fell a more modest 1%. This was driven by a 5% decline in its US Higher Education Courseware business and a 1% fall in US K12 Courseware unit.
On Monday, Pearson announced it has sold its US K12 business - which provides textbooks and other resources to students in the US from kindergarten through to 12th grade - for USD250 million to Nexus Capital Management LP in what it called a "major milestone" for its simplification programme.
Pearson proposed a 13.0 pence per share final dividend, up 8.3% from 12.0p the year prior. For the full year, the dividend was raised 8.8% to 18.5p from 17.0p the year before.
"We made good progress last year," Pearson Chief Executive Officer John Fallon said. "We increased underlying profits, outperformed our cost savings plan and invested in the digital platforms that are making us a simpler, more efficient and innovative company."
Pearson added its cost efficiency programme was "ahead of plan" in 2018. The FTSE 100-listed firm reported it had secured GBP130 million in incremental cost savings with one-off restructuring costs hitting GBP102 million.
"We are increasingly well placed to guide our customers through a lifetime of learning and help our partners shape the future of education," Fallon added. "We have a lot still to do, but we expect company wide sales to stabilise this year, and grow again in 2020 and beyond."
In 2019, Pearson expects to deliver adjusted operating profit of between GBP590 million and GBP640 million. The guidance is based on its current portfolio and accounting policies. In 2018, adjusted operating profit was reported at GBP546 million.
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