Monday, British education and media company Pearson Plc (PSON.L,PSO) reported a profit for the first six months of fiscal 2009 compared to a loss in the prior year. On an adjusted basis, pre-tax profit grew 32%, driven by strong double-digit sales growth in all segments. The company still expects fiscal 2009 adjusted earnings at or above the prior year level and also declared a higher interim dividend.
First-half profit was GBP 44 million, compared to prior year's loss of GBP 49 million. Profit for the period attributable to equity holders of the company was GBP 28 million or 3.5 pence per share, compared to loss of GBP 62 million or 7.8 pence per share a year ago.
Prior-year period results reflected a loss from discontinued operations of GBP 88 million related to the sale of Data Management business.
The company's first-half profit from continuing operations increased to GBP 44 million or 3.5 pence per share from last year's profit of GBP 39 million or 3.3 pence per share.
Excluding items, Pearson's adjusted profit grew to GBP 81 million from last year's GBP 60 million, and adjusted profit attributable to equity holders of the company went up to GBP 63 million from GBP 45 million a year ago. Adjusted earnings per share increased 41% to 7.9 pence from 5.6 pence in 2008.
On a statutory basis, pre-tax profit grew 13% to GBP 62 million from GBP 55 million last year, while adjusted profit before tax climbed 32% to GBP 111 million from GBP 84 million a year earlier.
In the first-half, Pearson's sales grew 22% to GBP 2.398 billion from GBP 1.965 billion in the previous year. The company said that currency movements added GBP 413 million to sales, largely due to the result of translation gains from the strength of the US dollar against sterling. The company generated approximately 60% of its sales and profits in US dollars.
On a constant exchange rate, sales rose 1%, while on an underlying basis, excluding the effects of exchange and portfolio changes, sales were flat in the first half of 2009.
Segment-wise, the company said its Education business traded ahead of expectations in the first half, resulting in 29% growth in sales to GBP 1.52 billion from last year's GBP 1.18 billion, while the growth was 5% at constant exchange rate, and 3% on an underlying basis. In the segment, sales from North American Education, Pearson's largest business, climbed 32% year-over-year to GBP 943 million, with a 1% growth in constant currencies, while underlying sales were flat.
International Education sales were GBP 446 million, up 22% on a reported basis, 13% at constant exchange rates, and up 10% on an underlying basis, benefiting from a particularly strong first-half performance in testing and qualifications. Professional Education sales rose 26% to GBP 132 million in the six months, while the growth was 2% at constant exchange rates as well as on underlying basis.
Pearson's Financial Times, or FT, Group recorded first-half sales of GBP 425 million, up 14% from the previous year. A 6% drop in sales from FT Publishing to GBP 176 million was offset by a 34% jump in sales from Interactive Data to GBP 249 million. Meanwhile, FT Group sales dropped 2% at constant exchange rates and 4% on underlying basis.
The company noted that Penguin book publishing segment traded well and in line with expectations in the first half, with sales of GBP 452 million, up 11% from last year on a reported basis, but down 8% at constant exchange rates and down 6% on an underlying basis.
During the period, the company's total operating profit rose 15% to GBP 109 million from GBP 95 million last year, and adjusted operating profit grew 27% to GBP 158 million from GBP 124 million in the previous year.
Further, Pearson said its board has declared an interim dividend of 12.2 pence per share, a 3.4% increase on 2008, reflecting its strong start to the year and its confidence in the full-year outlook. The dividend will be payable on September 18, 2009 to shareholders on the register at the close of business on August 21, 2009.
Looking ahead, Pearson said it continues to project fiscal 2009 adjusted earnings at or above the 2008 level of 57.7 pence per share. The company said that stronger business performance offsets negative currency impact of the weakening of the US dollar against sterling, providing an effective upgrade of 3 pence to adjusted earnings per share guidance for 2009.
Pearson noted that most of its sales and profits are generated in the second half, due to the seasonal phasing of its education and consumer book businesses.
"All of our businesses have faced a tough macroeconomic environment in the first half, and as expected some have seen particularly challenging market conditions. We are planning on the basis that these conditions persist but our strong market positions combined with sustained investment and innovation in digital and services businesses underpin our confidence for 2009 and beyond," the company said in a statement.
PSO closed Friday's regular trading session at $10.09, down $0.35 or 3.35%, on a volume of 258,422 shares, while PSON.L is currently trading at 664 pence on the London Stock Exchange, up 58 pence or 9.57%, on a volume of 2.8 million shares.
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