Pearson is today providing the following trading update at its Annual General Meeting.
Pearson reported record results in 2006 and our good trading has continued in the early part of 2007. We have performed well in the major school textbook adoptions; continued to roll out our innovative online learning and assessment platforms in Higher Education; published a string of bestsellers in Penguin; and achieved steady growth in both advertising and circulation at FT Publishing.
We are trading in line with expectations for 2007 and expect to achieve good underlying earnings growth, cash conversion ahead of our 80% threshold, and a further increase in return on invested capital. As always, our sales and profits will be concentrated in the second half of the year.
Our expectations for the full year remain:
- School to achieve underlying sales growth in the 4-6% range with margins improving;
- Higher Education sales to grow in the 3-5% range with stable margins;
- Professional revenues to be broadly level with margins improving;
- Penguin margins to improve further, as our publishing investment and efficiency programmes continue to bear fruit;
- Financial Times Group profit to grow strongly with our cost measures, integration actions and revenue diversification pushing margins into double digits at FT Publishing. IDC revenues to grow in the 6-9% range with net income growth in the high single-digits to low double-digits (headline growth under US GAAP).
Marjorie Scardino, chief executive, said: "We've achieved strong growth with a consistent strategy: leading content, services and technology to make it more valuable, international expansion and ongoing efficiency measures. Those advantages, and our solid start to the year, make us confident that 2007 will be another good year for Pearson."
Pearson generates about two-thirds of its sales in the US and each five cent change in the average £:$ exchange rate for the full year would have an impact of approximately 1p on adjusted earnings per share. The average £:$ exchange rate was £1:$1.84 in 2006 and £1: $1.96 in the first quarter of 2007.
For more information:
Luke Swanson/ Simon Mays-Smith/ Deborah Lincoln + 44 (0) 20 7010 2310
Note: growth rates are stated on an underlying basis, excluding portfolio changes and currency movements.
Pearson's AGM takes place today at the Queen Elizabeth II Conference Centre, Broad Sanctuary, London SW1P 3EE at 12 noon.