Pearson, the international education and information company, provided the following trading update at its Annual General Meeting on Friday 21 April.
Pearson has made a good start to 2006. We are trading in line with expectations and expect to achieve strong underlying earnings growth, good cash generation and a further significant improvement in return on invested capital. As always, our sales and profits will be concentrated in the second half of the year.
Glen Moreno, chairman, said:
"2005 was a very good year for Pearson with substantially higher earnings, return on capital and cash returns to shareholders. We are encouraged by our sustained momentum in the early part of 2006, and we are in good shape to deliver positive results for customers and shareholders year after year."
Pearson Education achieved record results in 2005 and we expect sales growth in the 3-5% range this year with margins improving further. In School, our major state textbook adoption campaigns have begun well and our market-leading testing business continues to gain share, winning long-term contracts in California, Illinois, Louisiana, Maryland, Mississippi, New York and Utah. In Higher Education we continue to benefit from our leadership position and from our new publishing, customisation and technology. Our recent acquisition of EET, creator of the most popular online assessment and tutorial programme for US college physics students, complements our groundbreaking online learning platforms in maths, economics and psychology. In Professional, we expect good growth in testing and Government Solutions to more than offset weak market conditions for technology publishing.
Penguin's strong publishing performance has continued into 2006 with a string of bestsellers and award-winners in its major markets. We continue to expect Penguin to grow at a similar rate to 2005, with margins improving steadily as we benefit from efficiency gains.
The Financial Times Group improved profits by more than one-third in 2005 and we expect a further significant increase this year. IDC expects another good year, benefiting from similar business conditions to 2005, strong organic growth and the contribution of recent acquisitions. The Financial Times is performing well as circulation improves (up 4%), advertising revenue increases (up 13%) and we continue to convert at least 80% of our advertising gains into profit.
Marjorie Scardino, chief executive, said:
"We have begun the year in the same fine form that we enjoyed throughout 2005. We expect 2006 to be another good year for Pearson as we continue to increase margins and grow ahead of our markets."
For more information:
Luke Swanson/ Simon Mays-Smith/ Deborah Lincoln + 44 (0) 20 7010 2310