Investors in Pearson (PSON) may have hoped that the recent sale of the FT Group - which includes Investors Chronicle - as well as its stake in The Economist Group would mark a new chapter for the education giant. But it was the same old story in 2015, as tepid trading drove adjusted operating profits down 2 per cent to £723m.
Underlying sales fell across Pearson's three main divisions. The core segment suffered as fewer people signed up for vocational courses in the UK, while the key growth business was hit by depressed spending on textbooks in South Africa. Profits only rose in North America, as strong demand for education software and online courses outweighed fewer college enrolments and more textbook returns. But Pearson's saving grace was its 47 per cent stake in Penguin Random House: the book publisher's underlying operating profits soared 30 per cent as bestsellers Grey and The Girl on the Train sold more than 7m copies each.
Muted trading weighed on cash generation and prompted Pearson's directors to write off £849m in growth and US assets. More positively, they expect to complete the majority of a £320m restructuring programme by the summer. And if all goes well they think adjusted operating profits could grow more than 29 per cent in two years to at least £800m in 2018.
Broker Numis expects EPS of 53p in 2016, down from 70.3p in 2015.
| PEARSON (PSON) | ||||
|---|---|---|---|---|
| ORD PRICE: | 846p | MARKET VALUE: | £6.9bn | |
| TOUCH: | 845-846p | 12-MONTH HIGH: | 1,517p | LOW: 645p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | NA | |
| NET ASSET VALUE: | 781p* | NET DEBT: | 10% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 4.82 | 1.05 | 119.6 | 42.0 |
| 2012 | 4.96 | 0.39 | 38.7 | 45.0 |
| 2013 | 5.07 | 0.38 | 36.4 | 48.0 |
| 2014 (restated) | 4.54 | 0.26 | 24.7 | 51.0 |
| 2015 | 4.47 | -0.43 | -43.3 | 52.0 |
| % change | -2 | - | - | +2 |
Ex-div: 7 Apr Payment: 6 May *Includes intangible assets of £5.16bn, or 629p a share | ||||
