Publisher Pearson raises guidance as it reports higher operating profit

LONDON – Publisher Pearson PLC on Friday raised its full-year earnings guidance as its expanding international education division led a gain in first-half operating profit.

Pearson, publisher of the Financial Times and Penguin books, reported that sales were up 3 per cent to 2.4 billion pounds ($3.9 billion) and adjusted operating profit rose 17 per cent to 208 million pounds.

As a result, the company said it expected earnings per share of 80 pence for the full year, up from 77.5 pence last year.

Net profit was down 35 per cent to 60 million pounds reflecting higher finance costs and a one-time gain a year earlier, when the company sold its controlling stake in Interactive Data Corp.

Investors largely welcomed the earnings report, sending Pearson shares up 3.4 per cent to 1,178 pence in morning trading on the London Stock Exchange.

“The group is well placed to benefit from the structural changes in its markets towards digital delivery, personalization, subscription services and mobile devices,” said Jonathan Jackson, head of equities at Killik & Co.

Digital subscriptions to the Financial Times increased by a third to 230,000, with mobile devices accounting for 15 per cent of the gain, Pearson said.

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Sales at Penguin fell by 7 per cent to 457 million pounds although electronic sales grew by 128 per cent.

The International division, the second-biggest in the group with business in more than 70 countries, posted a 27 per cent gain in sales.

Enrolment in Pearson’s Wall Street English centres increased by 25 per cent in China, where new centres were opened.

Pearson increased its stake in CTI, a South African private higher education company. It also raised its stake in TutorVista, an online business in India, and completed acquisition of the SEB learning systems business in Latin America.

The North American education unit again topped the company’s revenue table despite an 8 per cent drop to 940 million pounds.