An international media and education company, providing educational materials, technologies, assessments and related services to teachers and students. Owner of The Financial Times and part owner (47%) of Penguin Random House. I have a holding in my income portfolio (epic code: PSON).
Pearson issued a trading statement today and indicated that they expect to report a
full year operating profit of approximately £865m before restructuring charges, compared to £936m last year.
This decline reflects the associate accounting impact of the Penguin Random
House merger and lower underlying margins in North American Higher Education.
They expect Adjusted EPS of around 83p (84.2p last year) before
restructuring charges of approximately £130m (comprising £170m expensed and £40m
of savings achieved during the year), resulting in adjusted EPS of around 70p
after these charges, this compares to a market consensus 75.8p.
CEO John Fallon stated that trading conditions are still challenging in 2014, but remains confident of growth prospects in 2015.
Last year was always going to be difficult with the reorganising of the business, required restructuring and the problems with US budget approvals (US represents 60% of Group sales). I have no quarrel with the strategic direction of the business, it is just disappointing that the short-term trading problems in developed markets appears to be continuing. With little danger of a dividend cut or freeze, dividend cover is likely to be just over 1.45x, a little more patience is required while Fallon returns the business to growth.
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