Pearson’s (PSON) full-year trading update to December 2018 was mixed. In good news, the group expects adjusted operating profits of £540m-£545m for 2018, in line with its guidance of £520m-£560m and ahead of broker Liberum’s £492m estimate. Meanwhile, net debt is expected to fall from £432m in 2017 to £200m. And Pearson’s cost-efficiency programme was ahead of plan in 2018, with savings of around £130m.
But Liberum points out that restructuring costs were also higher than expected, at £100m. And analysts here note that, given Pearson’s expectations for adjusted operating profits, the implication is that – without its extra cost savings – the company “would have missed their guidance”. Pearson also expects annualised cost savings of over £330m by the end of 2019, against earlier guidance of £300m. But one-off restructuring costs are also expected to rise to around £330m, from £300m.
Underlying revenues were down 1 per cent year on year in 2018, with declines of 5 per cent in US Higher Education Courseware (US HECW) and US K12 courseware. And bosses expect US HECW revenue growth to be zero to minus 5 per cent in 2019, with “continued growth in aggregate” from the rest of the business.
