Pearson Warns On 2013 Earnings On Weak US, Sees Challenging 2014; Stock Down

(RTTNews) - Shares of Pearson Plc (PSO, PSON.L) declined around 8 percent in the morning trade after the learning company said Thursday that it continues to expect flat adjusted earnings per share before charges in fiscal 2013, citing weaker than expected trading particularly in North America.

Chief Executive John Fallon said, "With trading conditions still challenging in 2014, this further underlines the importance of the work we started in 2013 to reduce our established cost base and redirect our investment towards our biggest future growth opportunities. We will accelerate this transformation in 2014 and remain confident about our growth prospects in 2015 and beyond."

In its regular January trading update, the company said it expects adjusted earnings per share of around 83 pence before restructuring charges, in line with its previous guidance as well as the earnings recorded in 2012.

The company would record net restructuring costs of approximately 130 million pounds, comprising 170 million pounds expensed and 40 million pounds of savings, resulting in adjusted earnings per share of around 70 pence after restructuring charges.

Operating profit before restructuring charges for the year is projected to be approximately 865 million pounds, primarily reflecting the associate accounting impact of the Penguin Random House merger and lower underlying margins in North American Higher Education.

The company noted that it made good progress on its strategic goals in 2013. Meanwhile, the company faced tough market conditions throughout 2013 as cyclical, policy-related and structural pressures affected its education publishing and assessment businesses in its two largest markets of North America and the UK.

The company noted that North American education business was hurt by state budget pressures and the transition to the Common Core and lower enrolments. Pearson generates approximately 60 percent of its sales in the US.

However, Pearson continued to achieve strong growth in emerging markets, digital learning and new service-based business models and that it continues to invest behind those growth opportunities.

International education business was benefited by strong underlying performance in emerging markets, particularly in South Africa and China, offset by weak textbook sales in developed markets and policy changes affecting qualifications and textbook publishing in the UK.

The company is slated to release its preliminary results for 2013 on February 28.

In London, Pearson shares are currently trading at 1,195.68 pence, down 102.32 pence or 7.88 percent.