Monday, July 27, 2009

Pearson Reports Interim Results: Better than Anticipated

Pearson reported their interim financial results this morning. From the press release:
* Strong profit growth: Adjusted operating profit up 25%* and adjusted EPS up 41% in headline terms.
* Good competitive performances: FT Group and Penguin performing well in challenging markets and trading in line with expectations; Education trading ahead and gaining share.
* Healthy outlook: Strong positions in growth markets combined with accelerating digital and services businesses underpin confidence for 2009 and beyond.
* Dividend growth sustained: Interim dividend raised 3.4% to 12.2p.
* Trading ahead of expectations: Stronger business performance offsets negative currency impact, providing an effective upgrade of 3p to adjusted EPS guidance for 2009. So, full-year adjusted EPS still expected to be at or above the 2008 level of 57.7p per share.

Marjorie Scardino, chief executive, said: "The transformation we've been pursuing for a decade - from 'publishing' company to content, technology and services company - is paying off. Over the past six years, Pearson has delivered substantial growth; this year is about proving our resilience and competitive edge. So far, we've passed the test. Market conditions are tough and may stay that way; but we are confident that we will perform well this year and next."
Some other points from the release:

Education appears to be outpacing the company's expectations with underlying performance in the period better than expected and a traditionally better second half of the year yet to come. (To some degree this performance could be expected given the 'promises' made to investors with respect to the integration of their recent acquisitions and the performance gains from cost efficiencies and selling).

Penguin who's performance the company described as 'in-line with expectations' lost significant margin during the period versus last year. The company expects the second half to be stronger but have also put in place some 'organizational changes'. From the release some other information about Penguin's Digital Innovation:
  • Significant expansion of eBook publishing and sales. In the US and UK, Penguin has almost 10,000 eBooks available to date and expects to have almost 14,000 by year end including eSpecials and Enriched eBook Classics.
  • In the US, Penguin launched an online network with three channels featuring nine series of book-related programming for adults, young adults and children. Titled "From the Publishers Office", the site aims to build on Penguin's 2.0 initiatives to engage new audiences and to enhance the dialogue between authors and readers.
  • In the UK, Penguin and Puffin launch We Make Stories, a unique set of digital tools for children to create, print and share a variety of innovative story forms including pop-up books, customised audio books, comics and interactive treasure maps. The site is designed to encourage literacy, creativity and storytelling skills and is Penguin's first move into providing services. We launched iPhone applications for the Top 10 DK Eyewitness travel guides retailing at £4.99.
  • Penguin China is the first major international publisher to sell English books directly under its own brand on Taobao the leading direct-to-consumer online auction site in China.

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