Pearson adjusted operating profit flat but ahead of expectations

In the six months to 30 June, adjusted operating profit came in at £107m, in line with the same period a year ago but better than the £85m analysts had pencilled in.

Sales in the half fell 9% to £1.87bn, but were up 2% on an underlying basis, with sales in North America 3% higher than the first half of last year.

Pearson said US higher education courseware revenue grew modestly in the first half helped by lower returns, as expected. However, in line with its full-year guidance for the segment, the group continues to expect a decline in net sales in the second half as gross sales are hit by ongoing underlying market pressures.

The company lifted its interim dividend to 5.5p a share from 5p in 2017 and said it expects to deliver underlying profit growth this year. Full-year guidance was unchanged, with Pearson expecting to report an adjusted operating profit of between £520m and £560m and adjusted earnings per share of 49p to 53p for 2018.

The group also said it remains on track to deliver incremental costs savings of £300m a year as part of its three-year transformation programme announced last May, with the full benefits accruing from the end of 2019 onwards.

Chief executive John Fallon said: "Although there is still much to do, we have had a good first half and continued to make progress against our strategic priorities. We are driving ahead in digital learning, helping more people develop the skills they need to prosper in a fast changing world."

Liberum said the results look ok on the surface but the details are "not so great".

"It looks like Pearson is no nearer to selling its US K12 courseware business, which has been on the block for approaching a year and that will raise questions. Secondly, the language on US higher education courseware sounds quite cautious and digital sales in US higher education only grew 'modestly', which may also raise questions."

Pearson said in the statement that its K12 school courseware business continues to be held for sale.

At 1240 BST, the shares were up 3.2% to 953.40p.