The share price of Pearson (LSE: PSON) (NYSE: PSO.US) — the multinational publishing and education company — has so far plunged 8% this morning, following publication of the company’s preliminary results.
Total sales were up just 2%, at £5,177m. But underlying adjusted operating profit is down 23%, although the drop is only 9% if net restructuring charges are excluded. Both figures are slightly less bad at constant exchange rates, being 21% down and 6% down respectively.
The company attributes the fall in 2013 profit to a variety of factors, including the accounting impact of the Penguin Random House merger, lower margins in its North America market, sustained re-investment, and changes in revenue mix.
Adjusted earnings per share (after restructuring charges) are down 15%, to 70.1p per share, but the board is recommending raising the dividend by 7%, to 48p per share, which it says reflects its confidence in Pearson’s prospects.
The company says that it expects cyclical and policy-related pressures in its largest markets to continue in 2014, which will negatively affect revenues and margins. It also warned that adjusted earnings per share will fall in 2014, to between 62p and 67p per share.
But Pearson is clearly hoping that speeding-up its restructuring to shift to digital platforms, a mix of learning and educational services, and an increased focus on fast-growing economies, will pay off in 2015 and beyond.
Commenting on the results, chief executive John Fallon said:
“We are in the middle of what we believe will be a short, but difficult, transition — one that through our combined investment and restructuring programs will drive a leaner, more cash generative, faster growing business from 2015.
“We are uniquely positioned to tackle some of the biggest challenges in global education including the transforming power of technology. I am particularly excited about the significant opportunity digital education offers for Pearson and the next generation of learners“
At 993p, Pearson’s share price is down a hefty 26% so far in 2014 — much of that fall following a negative trading statement in late January — although it’s only fallen 14% since this time last year, during which time the FTSE 100 index has risen almost 7%. The five-year picture isn’t much rosier for Pearson shareholders, who have seen the share price grow only 50.5%, compared to a 77.5% increase in the FTSE 100.
