Monday, October 22, 2007

Pearson Ups Full Year Guidance

Last weeks positive results for McGraw Hill were said to bode well for Pearson's upcoming report and the news was confirmed this morning with Pearson reporting underlying revenues up 6% and operating profit up 20% for the first nine months versus the same period last year. Results including the impact of acqusitions and currency were 4% and and 17% respectively. From the press release:
Marjorie Scardino, chief executive, said: "We still have a lot of trading ahead of us, but every part of the company is doing well. We're benefiting from rapid take-up of our learning technologies; sustained increases in our audience and advertising at the FT; and bestselling publishing combined with operating efficiency at Penguin. This increases our confidence that 2007 will be another year of record profits for Pearson."

For the full year, the company is firing on all cylinders and is expected to achieve record performance in revenue, operating profit, cash flow and return on equity. The company is generally conservative in forecasting full year results but the confirm that all operating units are performing at or above their previous full year guidance.

Highlights for the first nine months of 2007:

Pearson Education underlying sales up 7% with good growth in all parts:

  • Our School business: Sales up 7% from sustained investment in content and technology and breadth in publishing, testing and services. Full-year sales growth around the top end of the 4-6% range and further margin improvement is expected even after reorganisation costs.
  • Our Higher Education business performed strongly through the start of the academic year. Sales are up 5%, with rapid growth in subjects where we offer our online teaching and assessment programmes (established services such as MyMathLab, MyEconLab and Mastering Physics as well as new programmes in Spanish, nursing and information technology).
  • More than 1.3 million US College students registered for our online learning programmes in the August and September back-to-school period, a 44% increase on the same period last year.
  • We now expect our worldwide Higher Education business to achieve full year sales growth around the top end of the 3-5% range with stable margins.
  • Our Professional education business continues to show strong growth. Sales are up 12% in the first nine months, and we now expect full-year sales growth of 8-10% (against our previous guidance of 5-7%) with further margin improvement.

In FT Publishing,

  • Sales are up 8% overall, with increasing content revenues. Our advertising revenues are up 9% in the first nine months (up from 7% growth in the first six months of the year).
  • We continue to expect FT Publishing to achieve double digit margins in 2007.

Penguin sales

  • Up 2% with a strong publishing performance from both new and established authors including Alan Greenspan (The Age of Turbulence), Khaled Hosseini (A Thousand Splendid Suns), Jamie Oliver (Jamie at Home) and Elizabeth Gilbert (Eat, Pray, Love). For the full year we continue to expect Penguin to improve margins further, as our publishing investment and efficiency programmes bear fruit.
Pearson Press Release

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