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| Pearson reports slight profit downgrade | Pearson reports slight profit downgrade |
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| Pearson's share price is down more than 3%, the biggest faller in early trading among FTSE 100 companies, after the publisher of the Financial Times surprised investors reporting a profits downgrade for 2012. | |
| In early trading, Pearson shares were down 3.5%, 44p to £11.94. | |
| Pearson, which has developed a reputation in the city for consistently beating its own forecasts, has downgraded operating profit and earnings per share for 2012. | Pearson, which has developed a reputation in the city for consistently beating its own forecasts, has downgraded operating profit and earnings per share for 2012. |
| Pearson said that weak market conditions in the fourth quarter – key selling season for corporate advertising, publishing sales at its Penguin book arm and higher education business – means that it expects operating profits of £935m for 2012. | Pearson said that weak market conditions in the fourth quarter – key selling season for corporate advertising, publishing sales at its Penguin book arm and higher education business – means that it expects operating profits of £935m for 2012. |
| Adjusted earnings per share is forecast at 84p. | Adjusted earnings per share is forecast at 84p. |
| The consensus among city analysts was for Pearson to report operating profits of £942m and eps of 84.9p. | The consensus among city analysts was for Pearson to report operating profits of £942m and eps of 84.9p. |
| While the lowering of estimates is considered "light", Pearson has developed a reputation in the city for consistently beating its own forecasts. | While the lowering of estimates is considered "light", Pearson has developed a reputation in the city for consistently beating its own forecasts. |
| FT Group, home to the Financial Times, expects to report "good revenue growth" for 2012. | FT Group, home to the Financial Times, expects to report "good revenue growth" for 2012. |
| Pearson said that the growth at the division, which includes a 50% share in the publisher of the Economist, came despite a deterioration in advertising sales in the fourth quarter. | Pearson said that the growth at the division, which includes a 50% share in the publisher of the Economist, came despite a deterioration in advertising sales in the fourth quarter. |
| FT Group digital and subscription-based revenues continued to grow in 2012, although profits will be "significantly" lower year-on-year because of "further actions to accelerate the shift from print to digital". | FT Group digital and subscription-based revenues continued to grow in 2012, although profits will be "significantly" lower year-on-year because of "further actions to accelerate the shift from print to digital". |
| The division's profits will also be hit by the loss of income from FTSE International, in which Pearson sold its 50% interest to the London Stock Exchange for £450m in December 2011. | The division's profits will also be hit by the loss of income from FTSE International, in which Pearson sold its 50% interest to the London Stock Exchange for £450m in December 2011. |
| FTSE accounted for £20m of profit and 2.2p of eps in 2011. | FTSE accounted for £20m of profit and 2.2p of eps in 2011. |
| The division is the subject of constant speculation of a possible £1bn sale following the appointment of new Pearson chief executive John Fallon. | The division is the subject of constant speculation of a possible £1bn sale following the appointment of new Pearson chief executive John Fallon. |
| Penguin, which is to be merged in a joint venture with rival Random House, benefited from a good fourth quarter and "traded in line with our expectations in its key selling season". | Penguin, which is to be merged in a joint venture with rival Random House, benefited from a good fourth quarter and "traded in line with our expectations in its key selling season". |
| The division will report flat revenues on a constant currency basis year on year – in spite of tough conditions in the physical sales market – although perhaps tellingly Pearson does not say how Penguin's performance rates on the key metric of like-for-like sales. | The division will report flat revenues on a constant currency basis year on year – in spite of tough conditions in the physical sales market – although perhaps tellingly Pearson does not say how Penguin's performance rates on the key metric of like-for-like sales. |
| In Pearson's education division, which accounts for 75% of the company's business, its North American division has endured a tough year. | In Pearson's education division, which accounts for 75% of the company's business, its North American division has endured a tough year. |
| The company said that the US school and higher education publishing industries declined by 11% in the first 11 months of 2012, which hit Pearson's operations. | The company said that the US school and higher education publishing industries declined by 11% in the first 11 months of 2012, which hit Pearson's operations. |
| "Our services and digital-learning revenues continued to grow rapidly and we benefited from a strong performance from recent acquisitions and tight cost control," said Pearson. | "Our services and digital-learning revenues continued to grow rapidly and we benefited from a strong performance from recent acquisitions and tight cost control," said Pearson. |
| "In general, Pearson's businesses continue to face tough market conditions and structural industry change which we see continuing into 2013," it added. | "In general, Pearson's businesses continue to face tough market conditions and structural industry change which we see continuing into 2013," it added. |
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