Saturday, February 27, 2016

Pearson Closing the Book On Difficult 2015; Strong PRH Results Could Ebb In 2016

Publishers Lunch

Pearson reported full-year results for a rough 2015 that are line with their previously-reduced guidance, and their January announcement of plans to cut 4,000 jobs and take restructuring charges of £320 million in 2016.

For 2015, sales of £4.468 billion fell by 2 percent (£72 million), and adjusted operating profit of £723m was down by the same 2 percent (£9 million). Actual operating profit, however, swung to a loss of -£404 million (compared to profits of £348 in 2014). The two big movements of the year are found in their "statutory profit" of £823 million. On the positive side, sales of the FT, The Economist Group and PowerSchool yielded £1.214 million on a pre-tax basis. But the company suffered mightily with impairment of goodwill and intangibles of £849 million, "primarily reflecting challenging market conditions in our Growth and North American businesses."

One bright spot was Penguin's 47 percent of Penguin Random House (which helps you see why they were happy to hold onto to their stake for a little longer). Remember that Penguin only reports their share of trade publisher's profits, and even that is reported on an after-tax basis (and Pearson had a lower tax rate this year). Full PRH results will come via Bertelsmann's annual report, not due until March 22.

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