Pearson Boosts Education Unit Guidance; Forecasts Record Year

Pearson plc, publisher of the Financial Times, raised its 2007 sales guidance for its education business during an upbeat trading update Monday. "We still have a lot of trading ahead of us, but every part of the company is doing well," said CEO Dame Marjorie Scardino. "This increases our confidence that 2007 will be another year of record profits for Pearson." All the company's businesses are in line with or ahead of projections. Operating profit is up 17% for the first three quarters; sales are up 4%. Including acquisitions and currency movements, sales were up 9% and operating profit 20%. Pearson upped its growth forecast for the professional education unit to 8-10% from 5-7%. The unit's 12% growth so far in 2007 has been driven primarily by demand for GMAT, driving theory and nursing examination materials. The school business unit is expected to grow "around the top end" of a previously forecast 4-6% range on market share gains in U.S. school publishing. The higher education business is on track to hit the top end of a 3-5% growth range for the year, and ad revenues for FT Publishing are up to 9% from 7% mid-year. Penguin, the company's consumer book division, got a boost from the publication of Alan Greenspan's memoir The Age of Turbulence. "With a yield of over 4% we regard Pearson as attractive in an uncertain market environment," wrote Numis Securities in a note. Pearson shares gained 1.5% to 776.5 pence in London trading Monday.

Sources: Bloomberg, Financial Times, Reuters
Commentary: FT.com Still Doesn't Get It • 10 College Stocks to Study
Stocks to watch: PSO. Competitors: NWS
Earnings call transcript: Pearson Q2 2007

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