16th Jan 2020 08:37
(Alliance News) - Pearson PLC on Thursday said it expects up to a 15% decline in operating profit for 2020 amid the changing preferences of learners.
The stock was 11% lower in London in morning trade at 550.00 pence a share.
In addition, the publishing and education company said Chief Financial Officer Coram Williams will be leaving the company to take on a similar role at an undisclosed company based in Europe.
The move follows the retirement of Chief Executive John Fallon - which was announced in mid-December. Fallon intends to leave in 2020, once a successor has been appointed.
Pearson said Deputy CFO Sally Johnson will succeed Williams on his departure later this year, allowing sufficient time to ensure a smooth and orderly transition.
Johnson joined Pearson in 2000 and was appointed deputy CFO in 2017. Prior to that she was finance & operations director at Dorling Kindersley and has also held a number of finance positions at Penguin UK.
Back in December, Pearson agreed to sell the remaining 25% stake in Penguin Random House for USD675 million to Bertelsmann SE & Co KGaA, which currently holds the other 75%. This transaction values the Penguin venture at an enterprise value of USD3.67 billion.
Turning to 2019 performance, Pearson said its underlying revenue was flat, while adjusted operating profit was GBP590 million, within the guidance range, and up 8.1% from GBP546 million in 2018.
US Higher Education Courseware revenue declined by 12%, though there was "modest" growth in digital revenue. The result follows a swap of print products for digital only formats, Pearson said, as campus bookstores are buying less physical inventory due to changing student behaviour to eBook from a physical text.
For 2020, Pearson expects to deliver adjusted operating profit between GBP500 million to GBP580 million, including the 25% stake in Penguin Random House.
The FTSE 100-listed company also said it expects trends seen in 2019 in US Higher Education Courseware to continue with "heavy" declines in print partially offset by modest growth in digital as more products are added to the global learning platform.
"Pearson is now a simpler, more efficient company, with strong financial foundations. This enables us to continue to invest in digital innovation and platform-based products," said Fallon.
"Experience, outcomes and affordability will all matter and while there is still much to do we are well placed to benefit from these trends to achieve future, sustainable growth," added Fallon.
By Evelina Grecenko; [email protected]
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