Pearson puts a gloss on profits drop

12 April 2012

PEARSON, the media group behind the

Financial Times

Advertising revenues on its major titles continue to slide, with January and February significantly lower year-on-year. There was likely to be no growth in advertising revenues this year.

But Pearson reckons last year's cost-cutting and its US education business will underpin profits growth. 'We are confident of resuming our progress whatever the economic climate,' said chief executive Dame Marjorie Scardino. Pearson added: 'We expect a number of factors to contribute to a significant recovery in adjusted earnings per share.'

The shares climbed 7% to 823p in early trade.

Profits fell 12% to £294m before tax for the year ended December, hit by what Pearson dubbed the worst TV and newspaper advertising market for more than a decade.

That was the first time Scardino has failed to post double-digit earnings growth since she took over in 1997. But the profit was still above City forecasts of around £271m.

Pearson wrote off £153m, mostly for the acquisition of Dorling Kindersley. But it expects the children's publisher to turn a profit this year. Pearson warned in December the downturn had spread to its core education business and that the division would fall well short of forecasts, mirroring a rough ride in its advertising-exposed business publishing.

The group added that 2002 profits would also be helped by the eventual sale of its stake in RTL, Europe's biggest commercial broadcaster.

Reporting separately, RTL posted a 35% drop in underlying earnings to e361m, and warned of weak ad markets 'for at least the first half of 2002'. The company is majority-owned by Bertelsmann, the German media giant recently tipped to bid for ITV broadcaster Carlton.

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