18th Jan 2017 07:23
LONDON (Alliance News) - Education company Pearson PLC on Wednesday said it has withdrawn its operating profit target for 2018 and warned on its outlook for 2017, though it said its results for 2016 will meet its expectations.
Pearson said its operating profit for 2016 will meet its guidance, despite an "unprecedented decline" in its North American higher education courseware business in the fourth quarter of the year. This will be offset by the restructuring Pearson undertook last year, the cost savings from which will be a little ahead of plan, it said.
Beyond North American higher education courseware, Pearson said its other divisions were in line with its expectations in 2016, with a stabilisation in its UK qualifications arm and better profit from its North American student assessment business.
But the pressures on the North American higher education courseware business have forced the group to rebase its expectations for 2017, on the assumption these woes will not abate. Pearson said it will accelerate is shift to a digital business model in the division, investing another GBP50.0 million in doing so, and will increase its participation in the courseware rental market.
In addition, Pearson said it will continue to reshape its overall portfolio and will serve notice to German partner Bertelsmann AG that Pearson will sell its 47% stake in the Penguin Random House book publishing joint venture. The proceeds from this will be used to boost Pearson's balance sheet and to make further investment in its core education business.
Pearson will enter 2017 with an underlying operating profit base about GBP180.0 million lower than it had expected in early 2016, and this means the group also has trimmed its underlying operating profit guidance for the 2017 to GBP570.0 million to GBP630.0 million
Pearson will rebase its dividend payout in 2017 due to the problems faced in the business, though it committed to paying out a 34.00p final dividend for 52.00 pence in total for 2016, in line with previous guidance.
In addition, Pearson has withdrawn its guidance for underlying operating profit of GBP800.0 million or more for 2018.
The company will publish annual results on February 24.
By Sam Unsted; [email protected]; @SamUAtAlliance
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