Shares in education and publishing company Pearson (LSE: PSON) were down 2% in early trading after it released Q3 results. The company reported a 6% decline in revenue as the strength of sterling impacted sales in North America and emerging markets. Sales were level on an underlying basis.
The company is undergoing an extreme restructuring to adapt to declining print volumes and the shift to digital consumption of media. Business generated from digital products and services more than doubled to 60% of revenues in 2013. The CEO John Fallon noted that restructuring was on track, and expects the strategy shift to create a “leaner, more cash generative, faster growing business from 2015”.
Pearson experienced a headline 6% fall in revenue in its largest market North America. Constant exchange rate (CER) growth of 2% was driven by good growth from Pearson Online Services and Pearson VUE.
Core markets, including the UK and Australia, reported a CER revenue decline of 7%. The Financial Times reached record paid circulation of almost 690,000 in the quarter, due to a strong growth in digital subscriptions, but a decline in print sales resulted in a slight decline in revenues year on year.
Penguin Random House, formed from the merger of Penguin Group and Random House in 2013, performed well in the quarter, and management expect to see benefits from their 47% ownership in 2015.
The company also announced that CFO of eight years Robin Freestone will stand down from his position in 2015 in order to explore a range of other interests. He said:
“I feel that eight years as CFO is long enough for anyone to play this type of role. I am focused now on delivering our financial commitments in 2014 and developing our 2015 plans, supporting Pearson and my board colleagues in their search for a successor, and facilitating the arrival and induction of that person. After that I look forward to beginning a new phase of my career.”
Pearson reiterated full-year EPS guidance of between 62p and 67p. The expected consequences of the poor trading environment and continued restructuring activity were included in the prediction.
