2nd UPDATE: Pearson Upgrades 2010 Outlook After Strong First Half
26 Julio 2010 - 3:50AM
Noticias Dow Jones
Pearson PLC (PSON.LN) Monday upgraded its outlook for 2010 as
the publisher reported better-than-expected first-half results,
underpinned by the strong performance of its education and
publishing operations.
While market conditions remain uncertain and growth is expected
to slow in the second-half due to tough comparables, Pearson, which
generates about 60% of its total earnings and sales from its vast
education operations, forecast adjusted earnings of approximately
70 pence a share for the year, up 7% from 65.4 pence a year
earlier. The guidance takes into account the earnings impact from
the sale of its 61% stake in Interactive Data Corp.
"The 2010 finish line isn't yet in sight, but this is as good a
start to our year as I've seen. That boosts our confidence in the
full year, enabling us to brighten our outlook and raise our
guidance," Chief Executive Marjorie Scardino said.
"We've invested consistently in global and digital education and
information and that's helping every part of Pearson grow strongly,
even in uncertain markets. We're also able to accelerate that
change as we part company with Interactive Data and put the
proceeds to work in the world's leading learning company," she
added.
Adjusted operating profit from continuing operations--which
excludes amortization of acquired intangibles such as publishing
lists, and any acquisition or disposal costs, and is one of the
figures tracked by U.K. analysts--jumped sharply to GBP178 million
for the six months ended June 30, beating market expectations of
GBP97 million, underpinned by strong growth across all its
businesses as well as the strength of the dollar against the
sterling. That compares with GBP84 million a year earlier.
Adjusted operating profit doubled in the education division, the
FT Group and Penguin books in the first half of 2010. Its U.S.
Schools publishing business and FT advertising returned to growth,
while Mergermarket benefited from an improvement in renewal
rates.
Pearson, which generated approximately 60% of its sales and
profits in dollars in the first half, reported more than a
threefold jump in net profit to GBP92 million from GBP28 million a
year ago on the back of an 8.8% rise in sales to GBP2.34 billion
from GBP2.15 billion. The profit rise was also helped by lower
operating and finance expenses, while finance income was up
slightly.
Pearson, which also publishes the Financial Times newspaper and
Penguin books, has been clear about its strategy to expand its
education business in Asia, Africa and Latin America.
Since the sale of its 61% stake in IDC for around $2 billion
before tax in May, which is expected to be wrapped up in the next
few weeks, the group has bought two businesses, Melorio PLC
(MLO.LN) for GBP99.3 million and Sistema Educacional Brasileiro's
learning systems business for GBP326 million. Scardino reiterated
Monday that the company will also reinvest some of the IDC sale
proceeds in existing operations.
Royal Bank of Scotland analyst Paul Gooden said Pearson's 2010
adjusted earnings per share consensus should settle at around 71
pence to 72 pence which "should be achievable" if management are
comfortable with guiding 70 pence a share at this stage of the
year.
Gooden, who has a hold rating on Pearson and 865 pence target
price, expects the shares to rise over the coming week, but notes
the bears will remain concerned about Pearson's counter-cyclical
business, expansion costs and the stock trading at a "material
premium" to its peers.
At 0808 GMT, Pearson shares were up 29 pence, or 3%, at 1002
pence, valuing the U.K.-based company at GBP8.02 billion, in a
slightly higher London market. It is the third highest riser on the
FTSE 100 index behind Tullow Oil PLC (TLW.LN) and ARM Holdings PLC
(ARM.LN).
Pearson declared an interim dividend of 13 pence a share, up 7%
from 12.2 pence a year earlier.
-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290;
lilly.vitorovich@dowjones.com
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