US spending aids Pearson
Pearson, the publishing group, enjoyed a strong third quarter as the American government ploughed funds into education.
The group that publishes the Financial Times posted a 20 per cent increase in operating profit as sales moved ahead 10 per cent in the nine months to 30 September.
Its key education division posted a 13 per cent increase in sales. Within that umbrella, sales to schools were up 17 per cent as it benefited from new exam initiatives in America. The higher education arm increased sales by 5 per cent. However the final quarter is more significant in sales terms as college students stock up on next term’s textbooks in December.
Pearson also lifted its guidance for the professional and technology arm, which publishes IT manuals and administers government testing programmes, to “double-digit” sales growth for the year. Sales at the division are running 17 per cent ahead.
Numis analyst Lorna Tilbian said Pearson’s performance was in line with the sector, following a robust third quarter update from rival publisher McGraw-Hill last month. She said the outlook also boded well for Reed Elsevier that reports later this month.
Tilbian said Pearson’s American education business, which accounts for the lion’s share of sales, was driven by “tax receipts and government coffers” with a business cycle of its own.
CEO Marjorie Scardino said Pearson continued to make gains in operating efficiency and was confident the business had momentum. “The FT Group is making solid progress while our education business powers ahead,” she said.
Sales at FT Group, which includes France’s Les Echos and other European titles, rose 5 per cent over the period. Advertising revenues at the FT rose 6 per cent and the newspaper is expected to break even by the end of the year
Penguin’s sales moderated from 5 per cent in the first half to 2 per cent at the nine-month stage. Pearson said this was a reflection of the publishing schedule that is weighted towards the first half.
