Thursday, February 28, 2013

Pearson Reports Financial Results

From their press release:
Pearson accelerates global education strategy:
Restructuring and investment in digital, services and emerging markets for faster growth, larger market opportunity and greater impact on learning outcomes 
Financial highlights*
  • Sales up 5% at CER to £6.1bn (with digital and services businesses contributing 50% of sales)
  • Adjusted operating profit 1% higher at £936m
  • Adjusted EPS of 84.2p (86.5p in 2011)
  • Operating cash flow of £788m (£983m in 2011)
  • Return on invested capital of 9.1% (9.1% in 2011)
  • Dividend raised 7% to 45.0p.
Market conditions and industry change  
Market conditions generally weak in developed world and for print publishing businesses; generally strong in emerging economies and for digital and services businesses.  Continuing structural change in education funding, retail channels, consumer behaviour and content business models.  Considerable growth opportunity in education driven by rapidly-growing global middle class, adoption of learning technologies, the connection between education and career prospects and increasing consumer spend, especially in emerging economies.  
Strong competitive performance
  • North American Education revenues up 2% in a year when US School and Higher Education publishing revenues declined by 10% for the industry as a whole.
  • International Education revenues up 13% with emerging market revenues up 25%.
  • FT Group revenues up 4% with the Financial Times’ total paid print and online circulation up to 602,000; digital subscriptions exceed print circulation for the first time.
  • Penguin revenues up 1%, with strong publishing performance and eBooks now 17% of sales.
  • Accelerated shift to digital & services and to fast-growing economies
  • Pearson announces gross restructuring costs of approximately £150m in 2013 (£100m net of cost savings achieved in the year), focused on:
1. significantly accelerating the shift of Pearson’s education businesses towards fast-growing economies and digital and services businesses;
2. separating Penguin activities from Pearson central services and operations in preparation for the merger of Penguin and Random House.

Restructuring expected to generate annual cost savings of approximately £100m in 2014.
In 2014, £100m of cost savings to be reinvested in organic development of fast-growing education markets and categories and further restructuring, including the Penguin Random House integration. 
From 2015, restructuring programme expected to produce faster growth, improving margins and stronger cash generation. 
Pearson expects tough trading conditions and structural industry change to continue in 2013.
Excluding restructuring costs and including Penguin for the full year, Pearson expects to achieve 2013 operating profit and adjusted EPS broadly level with 2012.

Investor presentation slides (pdf)


Pearson's Penguin Must Participate in E-Book Fixing Trial (Businessweek)
Pearson Launches EdTech Incubator for Startups (Mashable)
Pearson CEO says Financial Times is not for sale (FT)
Pearson Plans Shake-Up (WSJ)
EU to decide on Bertelsmann, Pearson publisher deal by April 5 (4Traders)

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