Friday, January 24, 2014

Pearson Earnings Lowered On "Tough" US Education Market and Higher Restructuring Costs

Publishers Lunch

Pearson provided a market update in advance of their February 28 full-year earnings report, telling investors that adjusted earnings per share will be lower than previously expected. Gross earnings are in line with their previous expectations, but restructuring costs of £170 million were £20 million higher than forecast in October, and cost savings from those changes were £10 million lower than planned. 

They note that "additional restructuring activity including an added warehouse closure announced in late 2013." Pearson's shares were down roughly 8 percent in early trading on the disappointing news.
Total gross operating profit for 2013 will be approximately £865 million before restructuring charges, compared to £936 million a year ago, "primarily reflecting the associate accounting impact of the Penguin Random House merger and lower underlying margins in North American Higher Education, particularly in the important fourth quarter."


The statement notes that "Penguin Random House benefited from a solid fourth-quarter publishing performance and in its key selling season traded in line with the expectations that we set out in our third quarter interim management statement."

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