Continuing its digital transformation, educational publisher Pearson (PSON) reported a 30 per cent increase in adjusted operating profit to £144m on an underlying basis during the first half of 2019. Single-digit underlying revenue growth was achieved across all three of the group’s business segments: North America, core and growth.
With lower college enrolment and contract exits, a decline in US higher education courseware and student assessment was expected. But despite these headwinds, underlying revenue in the largest division, North America, remained steady rising by 1 per cent. This came off the back of enrolment growth in online programme management as well as new contract wins in professional certification. Adjusted operating profit for the segment increased by over a fifth.
Weighing on statutory earnings, the spike in major restructuring costs from £24m to £64m largely relates to staff redundancies as the group completed 80 per cent of its headcount reduction. Having made incremental cost savings of £60m during the period, a further £70m is expected in the second half of the year.
Bloomberg consensus forecasts give adjusted pre-tax profit of £563m and EPS of 55.8p for the full year, rising to £614m and 61.3p in 2020.
| PEARSON (PSON) | ||||
| ORD PRICE: | 928p | MARKET VALUE: | £ 7.25bn | |
| TOUCH: | 927.8-928.4p | 12-MONTH HIGH: | 1,030p | LOW: 764p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 548p | NET DEBT: | 32% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 1.9 | 202 | 24.1 | 5.5 |
| 2019 | 1.8 | 13 | 6.1 | 6.0 |
| % change | -2 | -94 | -75 | +9 |
| Ex-div: | 15 Aug | |||
| Payment: | 13 Sep | |||
| *Includes intangible assets of £3.1bn or 392p a share | ||||
