30th Oct 2013 09:25
LONDON (Alliance News) - Pearson PLC was the biggest faller on the FTSE 100 after it warned Wednesday that its full-year operating profit before restructuring charges would be lower than in 2012, due to weak market conditions for college textbooks in North America and the impact of the Penguin Random House merger.
However, the publishing giant reiterated its full-year guidance for adjusted earnings per share, saying it is expected to be broadly in line with the 2012 earnings per share of 82.6 pence, before restructuring costs.
Shares in Pearson were trading down 3.4% Wednesday morning at 1,319.00 pence.
Pearson said sales for the first nine months were up 4% at constant exchange rates and up 2% in underlying terms.
The company expects to expend around GBP150 million in restructuring charges in 2013 as it continues its shift towards fast-growing economies and digital and services businesses, but cost savings achieved during the year will offset some of the charge, it said, reducing the figure to around GBP100 million.
Following the merger of Penguin and Random House in July, Pearson said it will now consolidate its share of the post-tax profit from Penguin Random House into its operating profit. This accounting treatment reduces Pearson's operating profit by around GBP25 million, it warned, but at the earnings per share level it would gain an equivalent benefit through its tax charge.
Pearson warned that it expected its Education margins to be lower than in 2012 due to lower margins in its North American Education division. Although low-margin US school sales proved resilient, Pearson said, lower freshman enrollments and book store purchasing had led to a weak market in higher-margin college textbook publishing.
Sales in International Education were up 4% as digital, services and emerging markets continued to grow well, although textbook publishing remained generally weak. Tough market conditions in the UK ahead of curriculum and assessment changes were partially offset by market share gains in assessment and higher education, Pearson said.
At the Financial Times newspaper, group sales remained broadly level, although digital subscriptions for the FT grew 24%.
Penguin Random House performed well in the third quarter. However, the strong performance last year caused by the success of 'Fifty Shades of Grey' influenced the comparison, Pearson said.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
Pearson