British media company Pearson Plc (PSON.L,PSO) reported Monday a sharp decline in fiscal 2012 profit on higher costs and in the absence of a year-ago gain on asset sale. Sales, however, increased as all segments performed well. Looking ahead for fiscal 2013, the company warned of tough trading conditions, noting that profits would be broadly flat with prior year.
The company also announced restructuring, with accelerated shift to digital & services and fast-growing economies. Pearson expects restructuring costs of about 150 million pounds in 2013, and annual cost savings of approximately 100 million pounds in 2014.
In London, Pearson shares are declining 41 pence or 3.37 percent, and are currently at 1,175 pence.
Regarding the current trading, the company noted that market conditions are generally weak in developed world and for print publishing businesses, while it is generally strong in emerging economies and for digital and services businesses.
Pearson expects 2013 operating profits and adjusted earnings per share to be broadly in level with 2012, excluding restructuring costs and including Penguin for the full year.
In Education, Pearson expects to achieve modest revenue growth in 2013 with margins similar to 2012.
The company expects the FT Group to benefit from continued growth in digital and subscription revenues in 2013, but advertising to remain weak and volatile.
Chief Executive John Fallon said, "Trading conditions are tough and structural changes mean many of our traditional publishing activities are under pressure. But the underlying demand for effective education remains immensely powerful and our developing world and digital services businesses have real scale and momentum."
For the year 2012, pre-tax profit plunged 59 percent to 434 million pounds, from 1.05 billion pounds. Annual earnings per share were 40.5 pence, a sharp drop from 119.3 pence in 2011.
According to the company, the sharp decline in profit reflects the 113 million pounds closure-related costs on Pearson in Practice as well as the absence of prior-year's 412 million pounds profit on the sale of FTSE International.
On an adjusted basis, earnings per share slid 3 percent to 84.2 pence from the prior year's 86.5 pence.
Sales, on a continuing operations basis, totaled 5.06 billion pounds this year, 5 percent higher than last year's 4.82 billion pounds.
Pearson is in agreement to combine its book-publishing business Penguin with German media holding company Bertelsmann AG's Random House to create Penguin Random House publishing group. The combination would be completed in the second half, and at that point, Pearson will no longer control the business, but will hold 47 percent stake.
On a business performance basis, sales rose 4 percent from last year to 6.11 billion pounds, and the increase was 5 percent at constant exchange rate. Underlying revenue, meanwhile, declined 1 percent.
In the year, digital and services businesses contributed 50 percent of total sales.
Further, the company said its board is proposing a dividend increase of 7 percent to 45 pence, subject to shareholder approval.
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