Pearson performs despite advertising downturn

Publishing group Pearson today delivered an improvement in underlying profits despite the advertising downturn faced by its Financial Times business.

The performance of its education publishing arm, which grew operating profits in 2002 by 19% to £326m (€475m), helped sustain the group during a tough year.

At the FT, revenues fell 19% to £202m (€294.38m) with the newspaper operating at a loss in the second half of 2002 after a further deterioration in advertising.

The company responded with a 14% reduction in costs but profits for the FT across the year still fell to £1m (€1.45m) from £31m (€45.17m) a year earlier.

Pearson added today it was not expecting an upturn in advertising in 2003 although its comments about other businesses were brighter.

Chief executive Marjorie Scardino said: “While the economic environment is uncertain, we are confident we will make further progress on earnings, cash and returns this year.”

She said all the businesses had “performed competitively” with the education division and the Penguin book publishing arm both recording good growth.

Across the group, underlying profits were in line with market expectations at £399m (€581.5m) – up from £294m (€428.5m) a year earlier – as Pearson also benefited from lower internet-based losses.

Penguin saw sales improve 5% to £838m (€1.2bn) with underlying operating profits up 11% to £87m (€126.8m) in spite of investment in new back office systems.

In Pearson Education, sales were 11% higher as the company’s higher education arm benefited from a booming college population in the United States.

The Professional publishing division grew revenues by 48% but progress in school publishing was weaker with sales down 5% because of a slower year for school textbook adoptions in the United States.