BUSINESS

Education publishing group Pearson sees share price fall 6%


Education publisher Pearson sees share price fall as it reports squeeze on its US business

  • But, annual profit still expected to come within expected range 
  • Shares in Pearson fell by 6 per cent in early morning trading

Jane Denton For Thisismoney

Education publishing group Pearson has seen its share price fall over 6 per cent after revealing its total revenue slipped by 1 per cent in the last year.

In today’s trading update, the group said its revenue levels had come under pressure amid challenging trading conditions in the US.

Looking ahead, the firm said it expects pressures in its US higher education business to continue this year, leading to flat revenue or a fall of up to 5 per cent.

In the red: Education publishing group Pearson has seen its share price fall over 5 per cent

In the red: Education publishing group Pearson has seen its share price fall over 5 per cent

Pearson is on track to meet annual profit guidance as it continues to make progress with a turnaround and efforts to slash its debt pile.

The FTSE 100-listed publisher expects 2018 adjusted operating profit to come in between £540million and £545million, in line with its previous guidance range of £520million to £560million.

Profits were buoyed by the the firm’s cost-cutting strategy, which is largely focused on its back-office operations. 

Pearson said it expects to make annual cost savings of over £330milllion by the end of this year, ahead of its original target of £300million. 

With its digital turnaround scheme in full swing, the publisher’s digital revenue accounted for 55 per cent of total sales last year, up from 50 per cent in 2017. 

Chief executive John Fallon said: ‘We have made good progress in 2018, returning Pearson to underlying profit growth. 

‘We are also building a platform to enable Pearson to achieve its full digital potential, empowering more people around the world to learn the knowledge and skills to flourish in the changing world of work. 

‘There is much still to do, but we are increasingly confident in Pearson’s potential to grow and prosper.’

Shares in Pearson fell by 6 per cent in early morning trading and are currently down 6.22 per cent or 60.7p to 915.9p.

Ian Forrest, an analyst at The Share Centre, said: ‘The fall in the shares today needs to be seen in the context of the shares considerably outperforming the market over the past year, even hitting a two year high in December 2018. 

‘As management implement further changes to the group, designed to gear it more towards education, we would still suggest no more than a hold for medium to higher risk investors.’

Pearson will publish its full year results on 22 February.    

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