22nd Oct 2007 07:01
Pearson PLC22 October 2007 22 October 2007 PEARSON NINE-MONTH TRADING UPDATE: UNDERLYING SALES UP 6% AND OPERATING PROFITS UP 20%FULL-YEAR GUIDANCE RAISED IN EDUCATION Pearson, the international education and information company, is today providingan update on trading in the first nine months of 2007. Pearson traded strongly through the third quarter, building on a good firsthalf. For the first nine months, underlying sales are 6% higher and operatingprofits 20% higher than in the same period last year. Headline sales are up 4%and operating profits up 17%. (Headline results include the impact ofacquisitions and currency movements). The fourth quarter is an important selling season in higher education andconsumer publishing, but at this stage all our businesses are trading in linewith, or ahead of, our previous guidance. For the full year, we remain on courseto achieve strong underlying growth on our key financial measures: earnings,cash generation and return on invested capital. Marjorie Scardino, chief executive, said: "We still have a lot of trading aheadof us, but every part of the company is doing well. We're benefiting from rapidtake-up of our learning technologies; sustained increases in our audience andadvertising at the FT; and bestselling publishing combined with operatingefficiency at Penguin. This increases our confidence that 2007 will be anotheryear of record profits for Pearson." Highlights for the first nine months of 2007 • Pearson Education underlying sales up 7% with good growth in all parts: Our School business, with sales up 7%, continues to benefit from sustainedinvestment in content and technology and breadth in publishing, testing andservices. We have once again gained share in US School publishing and testingand achieved good growth outside the US. Following a strong summer, we nowexpect full-year sales growth around the top end of the 4-6% range and furthermargin improvement, even after reorganisation costs. Our Higher Education business has also performed strongly through the start ofthe academic year. Sales are up 5%, with rapid growth in subjects where we offerour online teaching and assessment programmes (established services such asMyMathLab, MyEconLab and Mastering Physics as well as new programmes in Spanish,nursing and information technology). More than 1.3 million US College studentsregistered for our online learning programmes in the August and Septemberback-to-school period, a 44% increase on the same period last year. We nowexpect our worldwide Higher Education business to achieve full year sales growtharound the top end of the 3-5% range with stable margins. Our Professional education business continues to show strong growth. Sales areup 12% in the first nine months, and we now expect full-year sales growth of8-10% (against our previous guidance of 5-7%) with further margin improvement.We continue to have strong demand for our professional certifications includingthe Graduate Management Admissions Test, the NCLEX Nurses examination and theDSA/DVTA driving theory test, as well as growth in our range of state tests. Ourtechnology publishing imprints are also growing again, and we have continuingmomentum from our business imprints, including Wharton School Publishing and FTPress. • In FT Publishing, sales are up 8% overall, with increasing contentrevenues as both the Financial Times and FT.com have continued to buildtheir audiences through the recent volatility in global financial markets.Our advertising revenues have remained resilient through this volatilitywith FT Publishing advertising revenues up 9% in the first nine months (upfrom 7% growth in the first six months of the year). We continue to expectFT Publishing to achieve double digit margins in 2007. As previouslyannounced, IDC will be reporting Q3 results on 25th October. • Penguin sales are up 2% with a strong publishing performance from bothnew and established authors including Alan Greenspan (The Age ofTurbulence), Khaled Hosseini (A Thousand Splendid Suns), Jamie Oliver (Jamieat Home) and Elizabeth Gilbert (Eat, Pray, Love). For the full year wecontinue to expect Penguin to improve margins further, as our publishinginvestment and efficiency programmes bear fruit. Acquisitions and disposals We completed the acquisition of eCollege on 31 July 2007 and of Harcourt'seducation businesses in the UK and South Africa during the third quarter. Weexpect to complete the acquisition of Harcourt's US educational assessmentbusiness around the end of this year, subject to regulatory approval. We intendto hold an investor seminar on eCollege and Harcourt Assessment & Internationalearly in 2008, following completion of the Harcourt transaction. We remain inexclusive negotiations with LVMH over its proposed acquisition of Groupe LesEchos. Note: All growth rates are stated on an underlying basis from continuingoperations, excluding the impact of currency movements and portfolio changes,unless otherwise stated. Pearson generates around two-thirds of its sales in the US and each five centchange in the average £:$ exchange rate for the full year (which in 2006 was £1:$1.84) would have a translation impact of approximately 1p on adjusted earningsper share. The average rate during the first nine months of 2007 was £1:1.99(compared to £1:$1.82 in the first nine months of 2006) and the closing rate atthe end of September was £1:$2.01). For more information: Luke Swanson/ Simon Mays-Smith/ Charles Goldsmith + 44 (0) 207 010 2310 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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