Pearson Net Up 2.8%; Steady '09 Expected
04 march 2009 | 15:14
Publisher Pearson PLC posted a 2.8% increase in 2008 net profit and said it expects to at least maintain profit this year as its limited reliance on advertising revenue shields it from the worst of the media slowdown.
The company, which owns the Financial Times newspaper and Penguin Books, said net profit rose to £292 million ($418 million) from £284 million a year earlier. The bottom line was weighed down by a loss and tax charge related to last year's sale of Data Management, Pearson's data collection and scanning business, for $225 million. Full year revenue rose 16% to £4.81 billion.
Pearson, which also publishes educational textbooks in the U.S., bucked the media downturn as its higher-education business in the U.S. balanced a weak market for textbooks, and the fall in advertising at the Financial Times was offset by subscription and digital revenue.
The publisher said that it expects tough market conditions to continue in 2009, but that it will benefit from early actions "to revise products and supply lines, reduce costs and sustain investment." It expects to achieve earnings per share at or above the 2008 adjusted level of 57.7 pence.
Compared with other publishers, Pearson is less dependent on ad revenue. This has shielded it from the most virulent fallout of the media slowdown, but the company has also taken steps to cut costs in anticipation of a worsening economic climate.
In the U.S., where states are cutting budgets amid the economic downturn, Chief Executive Marjorie Scardino said she expects the economic stimulus package outlined by President Barack Obama to benefit the company, although this isn't yet factored into its outlook.
She said that Pearson's U.S. business would still be fine without the package, but added that "about half of the $100 billion in the education category is going to go to states, to help them stabilize their budgets," and pay for the projects that Pearson already has with them. The remaining $50 billion will benefit the company when they get channeled into educational reforms, she said.
At the Financial Times, the business most exposed to advertising, circulation revenue grew 16% in 2008 and online-subscription revenue grew 9%. However, advertising revenue at the newspaper fell 3%, dragged down by a 13% fall in the fourth quarter, a trend that has continued into the first two months of 2009.