Pearson set for record sales in education unit despite US fears
Wednesday 23 January 2008
Pearson, the publisher that owns the Financial Times as well as Penguin books, has soothed fears that the company's exposure to the US education market could inhibit its growth prospects in the year ahead arguing that it is confident that it can sustain its progress in 2008.
Shares in Pearson have come under pressure over recent weeks on fears that the downturn in the US economy could put the skids on its education division. The unit, which is predominantly based in North America, accounts for two-thirds of the company's sales. The publisher upgraded its growth forecasts for its education operations in October with progress expected across the school, college and professional markets.
December is a key month for the education business as US students stock up on books for the second semester. Pearson's statement that is expects 2007 to be its strongest ever year in education has improved sentiment that the company can continue to perform despite economic volatility.
Dame Marjorie Scardino, the chief executive of Pearson, said: "We have changed the shape of Pearson, invested in our future growth and made the company more efficient and more resilient. Those moves make us confident that we will sustain our financial and competitive progress in 2008."
Lorna Tilbian, an analyst with Numis Securities, said that although Pearson is not completely immune to an economic downturn, the better-than-expected 2007 results and favourable foreign exchange movements provide a cushion for the company in 2008. Although there could be pressure on state budgets in regions such as California and Florida, Ms Tilbian said that education is an area that governments will be loathe to cut budgets.
Pearson's other businesses also performed well over the Christmas period with subscriptions to the FT and other publications continuing to hold up well and advertising revenue continuing to match the 9 per cent rate reported in October.
The company's book business also performed well with titles from Alan Greenspan and Khaled Hosseini selling well over Christmas while the company's Puffin unit performed strongly, partly due to a joint venture with the BBC which benefited from the success of the revamped Dr Who series.
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