Pearson slumps into the red

PEARSON, THE media group, slid into the red for the first-half with a pre-tax loss of pounds 38m as the acquisition last autumn of Simon & Schuster's educational publishing business ramped up costs.

Pearson Education, which also includes Addison Wesley Longman, accounted for pounds 554m out of total sales of pounds 1.3bn. That represented a one-third rise on the year ago period. Prior to interest costs on debt of pounds 2.5bn and goodwill amortisation, operating profit rose 14 per cent to pounds 126m.

The media group's three other divisions all chalked up healthy earnings gains. The FT Group, including the Financial Times, a 50 per cent interest in the Economist and several continental business dailies, saw operating profit grow 14 per cent to pounds 79m, though sales fell marginally to pounds 330m due to changes in the business portfolio and adverse exchange rate movements. Average daily sales at the flagship Financial Times rose 9 per cent from a year ago and North American sales are on track to hit 100,000 per day by the year end.

Penguin, the publisher, boosted sales 13 per cent to pounds 263m as operating profit nearly doubled to pounds 31m. Pearson TV faced tough competition as sales rose only 4 per cent to pounds 159m, but lower losses at Channel 5 helped operating profit jump one-fifth to pounds 33m. Pearson also said it plans to spend about pounds 120m on on-line related investment this year, up from pounds 80m in 1998.