29th Apr 2005 07:02
Pearson PLC29 April 2005 29 April 2005 Pearson: AGM trading update Pearson, the international media and education company, is today providing atrading update at its Annual General Meeting. Our businesses have made a good start to the year and are trading in line withour expectations. We generate most of our sales and almost all of our profits inthe second half, but we continue to expect Pearson to grow strongly in 2005 andbeyond, with further progress on earnings, cash and return on invested capital. Dennis Stevenson, Pearson's chairman, said: "Our businesses have excellent prospects both this year and beyond. We havereduced our costs by close to £400 million and invested behind the long-termstrength of our franchises. Rapid growth in US education is now under way, weare seeing early signs of the long-awaited recovery in corporate advertising andwe are confident of strong growth on our financial measures." We expect 2005 to be a very strong year for Pearson Education. Our School business is benefiting from a sharp rebound in the US school textbookmarket, as state and federal education funds increase and as the new adoptionmarket opportunity grows to approximately $900m in 2005 (from $500m in 2004). Weare performing well in textbook adoptions, particularly with our new programmesin maths, science, music and foreign languages, and continuing to see strongtrading conditions in open territories. Our US school testing business isgrowing rapidly as it helps states meet new federal testing requirements, andthe state of Texas, our largest customer, intends to renew our contract for afurther five years. We expect our US school textbook and testing businesses togrow sales in double digits this year and improve margins steadily over the nextthree years. In US Higher Education we are once again performing ahead of the overall market.For the full year we expect to grow at a similar rate to 2004, as we continue tobenefit from our lead in publishing, technology and customisation. We areworking with DeVry University to create a customised print and online mathsprogramme for its 63 college campuses serving some 40,000 students in ourlargest ever adoption in higher education. We continue to expect good growth in our Professional businesses as they benefitfrom long-term testing and government contracts. In addition to the $500m of newcontracts won in 2004, in February we renewed and extended our largestgovernment contract, with the US Department of Education, for a further tenyears. We expect a further significant profit improvement at the FT Group. IDC, ourfinancial data business, is benefiting from strong growth and high renewal ratesin its institutional business and from the contribution of FutureSource,acquired in September 2004. IDC remains on target to achieve service revenue andnet income growth in the high single digit to low double digit range for 2005. Our network of business newspapers - which includes the Financial Times, LesEchos, FT Deutschland, Investors Chronicle and our interests in Vedomosti,Business Day, Financial Mail and The Economist - returned to profit last yearand we expect further progress in 2005. Advertising revenues at the FinancialTimes are ahead 3% in the year to date with continuing strong growth inrecruitment, luxury goods and online advertising, and forward bookings arerunning ahead of last year. If advertising revenues continue to grow at thisrate, we expect the Financial Times to be around breakeven this year and toimprove profits further in 2006. We received cash proceeds of £372m from thesale of our 79% stake in Recoletos on 8 April 2005. After a difficult 2004, Penguin is now trading in line with our expectations.Our UK warehouse is operating well and we are on track to move PearsonEducation's UK distribution into the warehouse in the summer. Penguin isperforming well on the bestseller lists in the US and the UK and has a strongpublishing schedule for the second half of the year. Our cost reductionprogramme is proceeding according to plan and we will expense approximately £5mon those cost actions this year, which will fall in the first half. Pearson generates around two-thirds of total revenues in the US. A five centchange in the average exchange rate for the full year (which in 2004 was £1:$1.83) will have an impact of approximately 1p on adjusted earnings per share.For the year to date, our average exchange rate is £1:$1.90. Pearson will report its interim results on Monday 25 July 2005. On Wednesday 4May we will publish further details of the transition to International FinancialReporting Standards, including our financial statements for 2003 and 2004 underIFRS. Note to editors: Pearson's AGM takes place today at the Queen Elizabeth IIConference Centre, Broad Sanctuary, London SW1P 3EE at 12 noon. For more information: Luke Swanson/ Charlotte Elston + 44(0) 20 7010 2310 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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