Pearson IMS

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 their first quarter IMS today, stating that trading is in line with the expectations set out in their full-year results (commented on here) of adjusted EPS of between 75p and 80p for 2015.

 

Profits are expected to be heavily weighted to the second half and their restructuring charges (expected to be £30m) will be phased towards the first half of the year, so expect a low level of reported earnings at the interim stage.

 

For the quarter, continuing sales were level at constant exchange rates and declined 1% on an underlying basis to £0.9bn.  Headline sales increased 5% with the benefit from the strength of the US Dollar (60% of sales) against Sterling partly offset by the weakness of key emerging market currencies, the Euro and the Australian Dollar.

 

The share price was down just over 1% to 1387p early on.  Pearson is one of a number of companies that are expected to benefit from the stronger dollar in 2015, for example a five cent move in the average £:$ exchange rate for the full year (which in 2014 was £1:$1.65) has an impact of approximately 1.3p on adjusted EPS.  Currently the average exchange rate shows over a 10c increase, so a more than 2.6p improvement in EPS if this is sustained for the full year.