UPDATE: Pearson 1Q Update Strong, Flags Annual Profit Growth
April 30 2010 - 4:27AM
Dow Jones News
Publisher Pearson PLC (PSON.LN) Friday said first quarter
revenue rose 7% to GBP1.08 billion, underpinned by its extensive
education operations, and reiterated that it expects another year
of underlying profit growth.
The U.K.-based company also said its U.S. school curriculum
business has returned to revenue growth in the traditionally quiet
first quarter, despite state budget pressures, and that its
Financial Times newspaper has seen a return to advertising revenue
growth, which was well received by U.K. media analysts.
Chief Executive Marjorie Scardino said the first quarter "never
tells us a great deal about the full year but our direction of
travel is encouraging."
"Our leadership in global education and the rapid growth of our
digital and services businesses across Pearson continue to propel
strong trading," she added.
Despite remaining cautious about the economic outlook, the group
is "confident we can build on our consistent record of profit
growth this year," Scardino said ahead of the group's annual
shareholder meeting in London later Friday.
At constant currencies, revenue was up 12% in the quarter ended
March 31. The group didn't release first quarter profit numbers or
forecasts for the full year.
Pearson publishes the Financial Times and Penguin books but is
dominated by its huge education division with imprints including FT
Prentice Hall, Longman and York Notes. Education accounts for
around 60% of its total earnings and sales.
The group said its U.S. School curriculum business returned to
revenue growth in the first quarter, helped by new textbook
programs.
At FT Publishing, strong demand for print and online
subscriptions to the Financial Times, an increase in new sales at
Mergermarket and a return to growth in advertising revenues all
contributed to a good first quarter. "We are encouraged by a more
positive environment for corporate and financial advertising, but
bookings remain volatile and visibility remains poor," Pearson
said.
The trading update was well received by analysts, with UBS
describing it as "another strong update." UBS has a buy rating on
the stock and 1100 pence price target.
"The solid start to the year and return to growth amongst more
cyclical parts of the business are encouraging," Citigroup said in
a research note.
At 0743 GMT, Pearson shares were down 2 pence, or 0.2%, at 1048
pence in a flat London market. The stock has risen 51% over the
past 12 months on the back of solid trading and market hopes it
will get a good price for the sale of Interactive Data Corp.
(IDC).
But Pearson was tightlipped on the sale process of IDC, in which
it holds a 61% stake. It merely reiterated that IDC's board is
"currently reviewing strategic alternatives for the company".
Pearson also said it expects "another good competitive
performance" from Penguin, with a good publishing schedule in the
second half of 2010. Demand for eBooks remains very strong with
Penguin developing new publishing models for digital devices, the
company said.
-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290;
lilly.vitorovich@dowjones.com
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