Pearson (LSE: PSON), the education/media group, is one of numerous companies reporting at the moment that is seeing the strong pound, particularly against the US dollar, take a chunk out of both sales and profits.
Pearson’s half-year figures this morning showed a 7% drop in sales to £2.05bn and the statutory loss before tax more than doubling to £36m. Around 60% of Pearson’s sales are in the US, and sales would have been 2% higher on a constant currency basis.
The first half of the year is traditionally Pearson’s weakest, and it still reckons that full-year adjusted earnings per share should fall between 62p and 67p. Admittedly this is quite a wide range, and it is based on exchange rates as at 28 February.
Growth in 2015 and beyond…
School curriculum changes and cyclical factors have had an impact on Pearson’s recent trading performance, but it sees conditions stabilising and growth returning in 2015 and beyond. As an indicator of this, the interim dividend was raised a respectable 6% to 17p per share.
This period was always likely to be a transitional one, with Pearson’s wide-ranging portfolio of businesses being reshuffled in 2013. Penguin merged with Random House (Pearson retains a 47% stake), Mergermarket was sold for £382m, and Group Multi, a Brazilian language training firm, was bought for around £500m.
The confident long-term outlook statement helped Pearson shares climb 3% higher to 1,130p this morning. At this level, they yield around 4.4%, although they are still well down on the 1,340p mark they began this year.
