Pearson’s share price jumped three per cent at the open this morning before falling away after the struggling education business reported its full-year results.
Although the figures reflected a “challenging year”, with sales down eight per cent and operating profit falling 21 per cent, investors had already been briefed on the damage in a January trading update.
Sales were down eight per cent in underlying terms to £4.55bn.
Pearson’s adjusted operating profit was down 21 per cent to £635m.
Adjusted earnings per share fell 16 per cent to 58.8p.
And net debt increased from £654m in 2015 to £1.1bn in 2016.
Pearson said its outlook for 2017 remained in line with its January trading statement, with operating profit expected to come in between £570m and £630m.
Why it’s interesting
See the sheer drop in Pearson’s share price in early 2017? Yes, that was when the FTSE 100 company put out its January trading update and withdrew its profit goal for 2018.
The former publisher of the Financial Times also announced plans to sell its 47 per cent stake in publisher Penguin Random House.
What the analysts say
Liberum’s media team, led by Ian Whittaker, has been scathing in its criticism of Pearson in recent weeks and has a firm “sell” rating on the company.
Liberum didn’t find too many surprises in today’s results, but did say that Pearson outperformed expectations on cashflow conversion.
Much detail had already been given at the January trading update on results and guidance, so no changes to guidance although earnings actually slightly better at 58.8p vs 57p suggested in January.
What the company said
Chief executive John Fallon said:
2016 was a challenging year for Pearson, but we remain the global leader in education, with a strong market position.
Our priorities for 2017 are clear. We will continue to accelerate our digital transformation, simplify our portfolio, control our costs, and focus our investment on the biggest growth opportunities in education.