Pearson sees sales rising in 2020 as adjusted profits rise

Publishing group Pearson said underlying full year adjusted operating profit rose 8% to £546m for 2018, in the in the upper half of guidance range, as it said it expected sales to grow again in 2020.

The company also revealed it had purchase pension insurance buy-in policy from Legal & General for £500m.

Underlying sales fell 1% to £4.1bn with declines in US Higher Education Courseware of 5% and in US K12 Courseware largely offset by the rest of the business growing in aggregate at more than 1%.

Pearson forecast 2019 adjusted operating profit of £590m - £640m and adjusted earnings per share of 56.5p - 62.0p including our US K12 Courseware business, which it sold last week for £193m.

On a statutory basis, sales fell by 9% in headline terms primarily due to portfolio changes reducing sales by £216m and currency movements decreasing revenue by £134m.

Statutory operating profit for the year was £553m, up from £451m, with the increase primarily due to profit on disposals of the Wall Street English and UTEL units.

Cash flow grew 15% to £547m as well net debt was slashing by £432m to £143m.

A final dividend of 13p was declared, up 8%, which equated to a full year dividend of 18.5p.

Chief executive John Fallon said he expected sales to stabilise this year, and “grow again in 2020 and beyond".