24th Apr 2015 10:31
LONDON (Alliance News) - Pearson PLC Friday reiterated its full-year earnings guidance as the strong US dollar helped boost sales in the first quarter of 2015, and Chairman Glen Moreno announced his intention to step down in the next year.
Moreno has been chairman of the publisher for more than nine years, a period in which Pearson shares have more than doubled. A committee headed by Independent Director Vivienne Cox will seek his successor.
Pearson said it continues to expect adjusted earnings per share of between 75 pence and 80 pence for the full year, assuming sterling exchange rates against the dollar and other key currencies as of January 21.
The Financial Times owner said that its first quarter is a "very light trading period", and at constant exchange rates, sales were level compared with the first quarter of 2014. At actual exchange rates the strong dollar boosted headline sales 5%, although this was partly offset by the weakness of some emerging market currencies and of the euro and the Australian dollar against sterling.
In North America revenue declined "modestly", Pesrson said, as declines in learning services due to later second semester purchasing and phasing of assessment revenue offset growth from its computer-based testing product VUE and inside services. In Growth markets, declines in South Africa partly offset a good performance in China English Language learning and Brazil 'sistemas', or learning systems.
Its Core business was in line with the previous year as strong growth in digital circulation at the Financial Times and modest growth in UK assessments was offset by declines in Australian higher education and its exit from technology publishing in some Western European markets.
The Penguin Random House publishing business was boosted by several best-sellers, including 'The Girl on the Train', and a tie-in for the 'Fifty Shades of Grey' movie.
Pearson said it is progressing well with its plans to potentially sell its PowerSchool student information business, although it said the process was at an early stage, and there is "no certainty" it will lead to a sale.
"Pearson has had a solid start to the year, in line with our expectations. We're making good progress in our work to have a bigger impact on student learning, which will in turn support our future growth," said Chief Executive John Fallon in a statement.
Liberum reiterated its Sell rating on the stock, saying Pearson's first quarter does not mean a lot in the context of the full year as it is second half weighted, and that the structural pressures on the business remain as the education space gets more crowded, and content becomes increasingly free.
Numis lowered its recommendation to Reduce from Hold, as shares in the company have had a "very strong run" over the past four months, and it sees better value elsewhere.
Shares in Pearson are trading down 0.9% at 1,390.00 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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