Pearson PLC Trading Statement (1687X)

TIDMPSON

RNS Number : 1687X

Pearson PLC

26 April 2019

Pearson 2019 Q1 Trading Update (Unaudited)

 
26(th) April 2019      Pearson, the world's learning company, is today 
                        providing an update on Q1 trading. 
=====================  =================================================================== 
Highlights               Underlying revenue up 2%, operating performance 
                          on track 
                           *    Revenue grew 2% in North America, 4% in Core and was 
                                flat in Growth. 
 
 
                           *    We remain on track to deliver annualised cost savings 
                                in excess of GBP330m(1) exiting 2019. 
 
 
                           *    We completed the sale of our US K12 Courseware 
                                business at the end of the quarter. 
 
 
                           *    Our guidance for 2019, after adjusting for IFRS 16 
                                and the disposal of US K12 Courseware, remains 
                                unchanged. We expect to deliver adjusted operating 
                                profit of between GBP590m to GBP640m. 
 
 
                           *    This guidance includes a post-IFRS 16 net interest 
                                charge of GBP60m, a tax rate of 21% to give an 
                                adjusted earnings per share range of 53.5p to 59.0p. 
                                This is based on the exchange rates at 31 December 
                                2018. 
 
 
                           *    Q1 net debt was down year-on-year at GBP0.5bn (2018: 
                                GBP0.6bn) on a pre-IFRS 16 basis. On a post-IFRS 16 
                                basis, Q1 net debt was c.GBP1.2bn. 
 
 
                           *    We continue to accelerate our digital transformation 
                                with momentum in key structural growth opportunities 
                                and the launch of a suite of digital products and 
                                capabilities for the back to school period this year, 
                                including: 
 
 
                          o The commercial launch of Revel, our fully integrated 
                          digital courseware product, on our new global 
                          learning platform 
                          o The introduction of our first AI powered math 
                          tutor as a mobile app marketed to calculus students, 
                          and 
                          o Ongoing development of our first AI powered 
                          essay marker, which will adapt to the professor's 
                          personal style. 
=====================  =================================================================== 
John Fallon, Chief Executive said: 
 "We are off to a strong start to the year, having laid good foundations 
 in 2018. We continue to make progress against our strategic priorities, 
 and we are bringing exciting new products and capabilities to market 
 in 2019 which will continue to accelerate our move to digital. We 
 expect our sales to stabilise this year and to increase our underlying 
 profit further." 
========================================================================================== 
Financial summary 
=====================  =================================================================== 
                                                                      Underlying growth 
Sales 
North America                                                                        2% 
Core                                                                                 4% 
Growth                                                                               0% 
Total                                                                                2% 
 
 

Notes

Throughout this announcement: growth rates are stated on an underlying basis unless otherwise stated. Underlying growth rates exclude both currency movements and portfolio changes.

(1) Based on December 2018 exchange rates, a significant part of costs and savings from the restructuring programme are US Dollar denominated and in other non-Sterling currencies and are therefore subject to exchange rate movements over the implementation timeframe.

Q1 Trading

In North America, revenue grew 2% in underlying terms with good growth in Online Program Management (OPM) and Virtual Schools which benefited from new partnerships and strong enrolment growth as well as Professional Certification which saw good volume growth in key segments including IT, Healthcare and Teacher Certification. This was partially offset by a slight decline in revenue from US Higher Education Courseware.

Our guidance for US Higher Education Courseware in 2019 remains unchanged: we expect net sales to be flat to down 5% for the full year. Q1 revenue was in line with expectations, declining slightly against a strong comparative in Q1 2018, which was helped by the absence of the additional returns provision we took in Q1 2017.

In our Core segment (which includes the UK, Australia and Italy), revenue grew 4% in underlying terms, helped by good growth in Pearson Test of English Academic and OPM as well as phasing in Courseware in the UK and Europe.

In our Growth segment (which includes China, Brazil, South Africa and India) revenue was flat in Q1 2019, with growth offset by timing of orders in China and Brazil. We continue to expect growth in this segment in 2019 weighted towards the second half of the year.

At Penguin Random House, trading is in line with our expectations.

We will hold a conference call for analysts at 8.30am today Friday, 26(th) April to discuss our first quarter results. A replay will be available soon after on our website www.pearson.com. Our AGM will begin today at 12 noon at IET London, 2 Savoy Place, London WC2R 0BL.

Contacts

 
                         Jo Russell, Tom Waldron, Anjali 
Investor Relations        Kotak                                               [phone] 
=======================  ==================================================  =============================== 
Media                    Tom Steiner                                          [phone] 
=======================  ==================================================  =============================== 
                         Charles Pretzlik, Nick Cosgrove, 
Brunswick                 Simone Selzer                                       [phone] 
=======================  ==================================================  =============================== 
Webcast details          Analyst and investor conference call details: 
                          United Kingdom Toll-Free: 08003589473 
                          United Kingdom Toll: [phone] 
                          PIN: 86680070# 
 URL for international    http://events.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf 
 dial in numbers 
 

Forward looking statements: Except for the historical information contained herein, the matters discussed in this statement include forward-looking statements. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing, anticipated cost savings and synergies and the execution of Pearson's strategy, are forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in future. They are based on numerous assumptions regarding Pearson's present and future business strategies and the environment in which it will operate in the future. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including a number of factors outside Pearson's control. These include international, national and local conditions, as well as competition. They also include other risks detailed from time to time in Pearson's publicly-filed documents and you are advised to read, in particular, the risk factors set out in Pearson's latest annual report and accounts, which can be found on its website (www.pearson.com/corporate/investors.html). Any forward-looking statements speak only as of the date they are made, and Pearson gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based. Readers are cautioned not to place undue reliance on such forward-looking statements.

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April 26, 2019 02:01 ET (06:01 GMT)