For the first time in 2017, Pearson’s (PSON) numbers offer a glimmer of hope. In North America – which contributes almost two-thirds of revenue – fewer stores are returning college textbooks. Savings from last year’s restructuring programme have helped to send adjusted operating profit to £107m in the reported period, from £15m in last year's first half. And free cash outflows narrowed to £342m. But the first half contributes very little to Pearson’s overall performance, and on some of the more meaningful metrics there is less room for optimism.
Demand for print books and school assessment material remains poor, meaning North American revenue dropped 1 per cent to £1.3bn on a constant-currency basis. And, despite management’s insistence that digital revenues are improving, there is little evidence of this in the numbers. Riskier, deferred revenues rose 4 per cent.
The most impressive performance came from the group’s 47 per cent stake in Penguin Random House, where adjusted operating profit rose 28 per cent to £46m. But the sale of just under half of that stake is due to complete in September, which has forced management to lower its guidance for the year to December 2017. The mid-point of adjusted operating profit expectations is now £576m, 9 per cent down on the 2016 return, while broker Numis expects adjusted EPS to fall from 70.3p to 56.8p.
| PEARSON (PSON) | ||||
| ORD PRICE: | 642p | MARKET VALUE: | £5.28bn | |
| TOUCH: | 641-642p | 12-MONTH HIGH: | 900p | LOW: 552p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | na | |
| NET ASSET VALUE: | 481p* | NET DEBT: | 41% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1.87 | -306 | -27.1 | 18.0 |
| 2017 | 2.05 | -10 | -2.1 | 5.0 |
| % change | +10 | - | - | -72 |
| Ex-div: | 17 Aug | |||
| Payment: | 15 Sep | |||
| *Includes intangible assets of £3.3bn, or 397p a share | ||||
