Pearson Nine-month Sales Up; Lifts FY09 Adj. Earnings View - Update

(RTTNews) - British education and media company Pearson Plc (PSON.L, PSO), in a trading update for the first nine months of fiscal 2009, said its sales increased 20% and operating profit grew 19%, helped by rapid growth in digital and services business. The company said that current trading is ahead of its expectations and also raised its full-year adjusted earnings outlook. For the first nine month-period, the company said it increased sales by 20% in headline terms and 2% at constant exchange rates. North American Education revenue headline growth was 30% and at constant exchange rates, rose 4%. International Education and Professional Education posted an increase in headline revenues of 18% each.

Pearson Education segment sales improvement in headline terms was 25%, while grew 5% at constant exchange rates. FT Publishing headline revenues declined 8%, while FT Group posted 10% growth in headline terms and at constant exchange rates, sales were down 3% for the nine-month period. In FT Publishing segment, the company said Financial Times continued to face a weak market for financial and corporate advertising in the third quarter, but it is now benefiting from its long-term strategy of earning premium revenues from users for valued content in print and online.

For the first nine months, Penguin had advanced headline sales by 12% and at constant exchange rates, sales were down 4%, as the expected tough retail market conditions were largely offset by a good publishing performance, strong growth in eBook sales, as well as good growth in international markets such as South Africa. Operating profit grew by 19% and improved 3% at constant exchange rates, the company said. According to the company, FT Group and Penguin are performing in line with expectations, benefiting from their investments in innovative digital products and emerging markets. Pearson said its education business is performing ahead of expectations despite challenging conditions in US School publishing.

In education, the company is gaining significant market share, with substantial growth in digital services and continued expansion into new market segments and geographies. Further, in education, Pearson continues to accelerate its transformation from book publisher to leading global learning technology and services company, which helped to gain share and grow faster than expected in North America. According to the company, fourth quarter is a vital selling season in education and consumer publishing, but it continues to see tough trading in some of its markets.

Looking ahead, Pearson said it currently expects full year adjusted earnings to be at or above 60 pence per share, assuming that the current exchange rate of £1 : $1.64 prevails in the fourth quarter. Earlier, Pearson had projected fiscal 2009 adjusted earnings at or above the 2008 level of 57.7 pence per share. Marjorie Scardino, chief executive, said, "We began 2009 in a cautious mood, wary of the impact of the global economic crisis on our company. We have steadfastly pursued a strategy based on quality content, digital innovation, new markets and efficiency gains. As we look towards 2010, we intend to be even more aggressive in these areas - especially new services and fast-growing markets."

PSON.L is currently trading at 834 pence, up 12 pence or 1.46%, on a volume of 1.72 million shares, while PSO closed Monday's regular trading at $13.54 on the NYSE.

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