Pearson raises full year earnings forecast

Pearson lifts full year earnings forecast as education business gains market share

• By Jane Wardell, AP Business Writer
• On 8:18 am EDT, Tuesday October 20, 2009

LONDON (AP) -- Pearson PLC, publisher of the Financial Times and Penguin books, raised its full-year earnings forecast on Tuesday as its education business benefits from moves into digital services and expansion in emerging markets.

Pearson said revenues across the group rose 20 percent and operating profits lifted 19 percent in the first nine months of the year. Sales rose 2 percent at constant exchange rates.

The company's education business, which supplies teaching materials to schools and colleges throughout the United States, representing 62 percent of sales, is beating expectations in spite of a "challenging" market with underlying revenues up 3 percent.

The company added that it is picking up market share in education, with substantial growth in digital services and continued expansion into new market segments and geographies.

"We have steadfastly pursued a strategy based on quality content, digital innovation, new markets and efficiency gains," said Chief Executive Marjorie Scardino. "As we look towards 2010, we intend to be even more aggressive in these areas - especially new services and fast-growing markets."

As a result, Pearson said it now expects full year adjusted earnings to be at or above 60 pence per share, assuming current exchange rates in the fourth quarter, up from the previously forecast 57 pence per share.

The company's shares were up 3 percent at 847.5 pence in midday trade.

Jonathan Jackson, head of equities at Killik & Co., said that Pearson sustained its strong momentum as a result of its strategy of long-term investment across all platforms.

"This has allowed the group to build a portfolio of market-leading businesses with a competitive advantage in content, technology, service and international reach," said Jackson.

Numis Securities increased its forecast for 2009 profits by 4 percent to 690 million pounds, followed by a broadly flat performance in 2010.

"We believe Pearson has invested consistently and see scope for further market share gains in addition to outperformance of our conservative assumptions," said Numis analyst Paul Richards.

Nine-month revenues at Penguin rose 12 percent -- falling 4 percent at constant exchange rates -- amid demand for titles including Jamie Oliver's "Jamie's America" and Nick Hornby's "Juliet, Naked."

Pearson said that it expected a strong fourth quarter, the unit's key selling period, with a publishing schedule that includes the latest from Patricia Cornwell, Greg Mortenson and Marian Keyes.

Sales at the FT Group rose 10 percent -- down 3 percent at constant exchange rates. The unit was hit by a downturn in advertising sales for the newspaper and The Economist weekly magazine. Pearson said the FT now has 121,000 paying subscribers to its Internet service, an increase of 22 percent compared to last year.

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