Pearson on track as turnaround continues

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

Total underlying revenue dipped 1% year-on-year due to declines in the firm’s US business, particularly in higher education courseware.

Pearson added that pressures in the US higher education business will continue in 2019, leading to flat revenue or a fall of up to 5%.

But the company’s cost-efficiency programme is “ahead of plan”, Pearson added, with around £130 million of cost savings delivered in 2018.

By the end of 2019, Pearson expects to reach annualised cost savings of £330 million.

Shares were down over 5% in morning trade at 925.4p.

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.”

For the next financial year, Pearson is pencilling in adjusted operating profit of between £590 million and £640 million.

The group, which has been selling assets such as the Financial Times and The Economist, has been moving towards a focus on the education sector.

Mr Fallon’s programme also includes efforts to slash Pearson’s debt.

Net debt more than halved in 2018 to around £200 million, down from £432 million the previous year.