27th Feb 2015 11:51
LONDON (Alliance News) - Publisher Pearson PLC Friday raised its dividend for 2014 as it posted earnings per share slightly ahead of its previous guidance, and announced that it will appoint Coram Williams, currently chief financial officer of its book publishing joint venture Penguin Random House, as its new chief financial officer.
Williams will become chief financial officer designate July 1, and will succeed Robin Freestone on August 1.
The Financial Times owner proposed a final dividend of 34.0 pence, taking its total dividend for the year to 51.0 pence, up from 48.0 pence a year before.
Pearson posted a pretax profit of GBP305 million for 2014, down from GBP382 million a year before, as sales declined slightly to GBP4.87 billion from GBP5.07 billion.
It posted adjusted earnings per share of 66.7 pence, down from the 70.1 pence it posted in 2013, but ahead of its previous guidance of 66.0 pence. The company said that the strength of sterling against the dollar during the year had reduced sales by GBP272 million. At constant exchange rates, sales grew 2%.
Pearson expects to post adjusted earnings per share of 75 pence to 80 pence in 2015.
It said its 2015 profits will reflect the stabilisation of cyclical and policy-related factors in its largest markets, the benefits of its 2014 restructuring, and the weakness of sterling against the dollar, partly offset by strengthening against the euro, Australian dollar and key emerging markets currencies.
In its largest market, North America, Pearson said it expects to see growth in online higher education services and its VUE business and learning services to be broadly level. Whilst the possibility of further policy related disruptions remain in the school market, it expects to see more stability in learning services and assessments, and growth in virtual schools.
In what Pearson considers its core markets, which include the UK, Italy and Australia, it said it expects "trading conditions to stabilise in the UK, growth in inside services to broadly offset declines in learning services in Australia, and sustained share in Italy following share gains in 2014. We expect the Financial Times to continue to benefit from, and invest in, its digital transition."
It said it expects good growth in China, a slightly better year in Brazil, and more stability in South Africa.
The company completed a restructuring and product investment programme in 2014, and said that in 2015 it will return to more normal levels of restructuring expenditure of around GBP30 million.
Additionally, the company is beginning the process to explore the potential sale of its PowerSchool and other student information systems businesses. PowerSchool contributed USD97 million in revenue in 2014. The company noted that the process is at an early stage, and there is no certainty it will lead to a sale.
"We've completed our intense two year restructuring and reinvestment programme and performed well competitively despite some challenging market conditions. We enter 2015 better placed to have a bigger impact on student learning through the combination of new technology and best teaching practice," said Pearson Chief Executive John Fallon in a statement.
Liberum said Pearson's results does nothing to change its negative view, reiterating its Sell rating on the stock.
"Guidance is not inspiring - a lot of wishy-washy stuff about continuing to expect growth to stabilise in 2015 but not much evidence," Liberum said. Additionally, since Pearson gave its update in January the positive tailwind from the strength of the dollar has become less favourable, which should knock "several pence off the EPS guidance", the broker said.
Investec reiterated its Hold rating for Pearson, but put its forecasts under review, saying Pearson's figures were as expected with no surprises it can see.
Shares in Pearson are trading up 1.6% at 1,418.00 pence Friday morning, one of the biggest gainers on the FTSE 100.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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