Pearson posts £2.5bn full year pre-tax loss
Publishing company Pearson, which delivered a profits warning in January, held its dividend steady as full year pre-tax losses widened to £2.5bn from £433m in 2015 as it booked an impairment of goodwill charge of £2.5bn relating to its US businesses.
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Better than expected underlying operating profits were down 21% at £635m due to weaker revenues, the partial reinstatement of incentives and “other operational factors”, Pearson said.
Sales fell 8% to £4.5bn in underlying terms. Good growth in Pearson VUE, US Virtual Schools Online Program Management and Wall Street English in China was more than offset by expected declines in US and UK student assessment and US school courseware, and a much worse than expected decline in North American higher education courseware.
This was partially offset by cost savings from the restructuring plan announced in January 2016, a larger contribution from Penguin Random House, helped in part by modest one-off benefits from the integration programme, and a return to profit in Pearson's growth markets of Brazil, China, India and South Africa.
Net debt rose to £1.1bn from £654m a year earlier.
The total dividend was held at 52p a share, but the company said it would rebase it from 2017 onwards.
Pearson in January slashed its profit forecast for 2017 by £180m and abandoned its £800m target for 2018, adding that it planned to sell its stake in publisher, Penguin Random House to shore up its balance sheet.
The company said its 2017 outlook remained in line with its January trading statement with the guidance for operating profit £570m - £630m, adjusted earnings per share of 48.5p to 55.5p and cash conversion in excess of 90%.
“Our early trading is in line with expectations. The phasing in our North American higher education courseware business in 2017 will show a benefit from returns normalising in the first half, whilst the underlying market pressures we have described will impact gross sales primarily in the second half.”
Pearson shares were down 2.55% to 629p at 0916 GMT.