Pearson expects lower first-half profits

Publisher and education business Pearson said that first-half profits would likely be lower than last year as it starts to phase in 150m pounds of restructuring costs.

Publisher and education business Pearson said that first-half profits would likely be lower than last year as it starts to phase in 150m pounds of restructuring costs.

Nevertheless, the company, which labels itself as the "world's leading learning company", reiterated its forecast for full-year operating profits to be flat on 2012.

Pearson said that trading in the first quarter was in line with its expectations with sales up 3.0% at constant currency at £1.2bn.

Its Penguin division is said to have had a good start to the year with market share gains in all key regions, however, the Financial Times Group is facing "weak" trading conditions for advertising.

The firm said that it expects the external environment to stay "challenging" for its developed world and publishing businesses in 2013 due to a number of cyclical and structural factors: "pressures on education budgets and college enrolments; retail consolidation; the shift in our business model from print sales to digital subscriptions; changing consumer behaviour and a dynamic competitive landscape."

Nevertheless, it said that there is a "considerable growth opportunity" in education, driven by a growing global middle class, adoption of learning technologies, the connection between education and career prospects and increasing consumer spend, especially in emerging economies.

As announced as part of its full-year results in February, Pearson is to recognise £150m in restructuring costs this year in order to "reshape the company to take advantage of these significant growth opportunities".

This investment is an attempt to accelerate the transition from print to digital and from developed to developing economies.

The company also intends to separate Penguin activities from Pearson's core operation in preparation for the subsidiary's merger with Bertelsmann's Random House book publisher, announced in October 2012.

The stock was up 0.61% at 1,156p by 08:23 on Friday morning.

Recommended

Ocado faces a “crunch” year – should you buy or avoid?
Share tips

Ocado faces a “crunch” year – should you buy or avoid?

Ocado was one of the big winners from the pandemic as customers moved online. But now it’s struggling, and losses are growing. So, asks Rupert Hargrea…
27 May 2022
What to buy as the tech-stock bull market crashes
Tech stocks

What to buy as the tech-stock bull market crashes

The decade-long bull market in tech stocks has come to a rapid halt. Investors need to distinguish solid stocks from speculative ones rather than just…
27 May 2022
Share tips of the week – 27 May
Share tips

Share tips of the week – 27 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
27 May 2022
Marks & Spencer shares look cheap – should you buy in?
Retail stocks

Marks & Spencer shares look cheap – should you buy in?

Marks & Spencer shares have been a disappointment for investors for two decades. But with the company now on something of a comeback, Rupert Hargreave…
25 May 2022

Most Popular

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?
Investment trusts

Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?

After a spectacular couple of decades, the Scottish Mortgage Investment Trust has fallen by almost 45% so far this year. Rupert Hargreaves asks if no…
26 May 2022