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Pearson hits profit target
LONDON, England (Reuters) -- Pearson Plc, publisher of the Financial Times newspaper, hit its earnings goals on Monday but the advertising downturn mauled its flagship title and the British media group said there was no recovery in sight. Sales of college books and slimmer Internet losses powered 2002 earnings per share 42 percent higher, offsetting declines in its newspaper and school textbook publishing and helping drive the group's battered shares more than five percent higher. Pearson Chief Executive Marjorie Scardino has bet everything on education, transforming the group from a jumble of assets into the world's biggest education publisher. But the company stressed on Monday that the Financial Times still remained core to its media empire despite the recent battering. "We're seeing no signs of an advertising recovery yet," Pearson Finance Director Rona Fairhead said. "We're working on the assumption that there will not be a recovery this year." Asked if Pearson would now consider selling the Financial Times, Fairhead said: "Marjorie says (the FT) would be sold over her dead body, and she's still very much alive." Pre-tax profits rose to £399 million ($630 million) in the year to end December 2002, from a previous £294 million, on revenues of £4.32 billion. Analysts had forecast pre-tax profits of £383-404 million. Pearson also beat its goal of 40 percent growth in earnings per share at 30.3 pence and the finance director said she was "pretty confident" the group would meet double-digit earnings growth this year too after missing its target in 2001. Pearson shares climbed 5.1 percent to 505 pence at 1255 GMT. The group's shares have been hit hard in recent weeks by concerns over the FT and the core school textbook arms. "It's a 'steady as she goes' story with no major upsets in these results. It's a mixed bag that didn't surprise anyone," said Michael Picken, analyst at CSFB. FT revampThe FT Group division, which accounts for 17 percent of group revenues, posted an eight percent slide in sales, with advertising at the Financial Times tumbling 23 percent and circulation falling six percent after big declines in Britain. "The FT is far from its peak with profits down £100 million since 2000 which has had a major impact on Pearson's earnings. But we have not lost market share," Scardino said. The finance director said advertising revenues were a "shade lower" in January and February. However, she declined to give specific figures on either revenues or volumes. Pearson has been slashing costs at the FT and its online version FT.com and said it would make further cuts this year. Some of the money will be reinvested in a revamp of the pink-pages newspaper this spring, Pearson said. "We will revamp some of the weekend sections and make some changes to the weekday newspaper. We are also planning our first advertising campaign for the FT in four years," Scardino said. Back to schoolThe core education division, which accounts for 60 percent of group revenues, posted an 11 percent rise in sales, driven by a 13 percent rise in college book revenues and a 48 percent jump in professional revenues. However, within education, school textbook sales fell five percent as the economic downturn spread and U.S. states tendered fewer contracts. But the group said it expected that to swing back to growth of between three and five percent this year. Pearson also expects to be a "shade ahead" of growth of between five and seven percent in the college market in 2003. But the professional market is seen as "somewhat down." In the Penguin book division, Pearson saw revenues rise five percent, boosted as its Dorling Kindersley arm turned to profit. Penguin also said it had signed a book deal with pop star Madonna to write five children's books. "While the economic environment is uncertain, we are confident we will make further progress on earnings, cash and returns this year," Scardino said. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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