Pearson bucks schools publishing trend

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Pearson has bucked a trend of cautious news from educational publishers, saying its US-dominated education business maintained its strong performance through to the end of 2005, and predicting progress for all its businesses in 2006.

In a trading update after the end of its financial year, the owner of the Financial Times said the group traded strongly at the end of the year, in line with the expectations it outlined in its third quarter results in November.

The group was “on track to report significant underlying growth in sales, adjusted earnings per share, free cash flow and return on invested capital,” it said, and continued to expect 2006 to be “another good year” of progress against its financial goals.

Shares in Pearson closed 16p higher at 686.5p after the group said the recent growth in advertising at the FT had been sustained and the newspaper would break even for the year.

The education business, where revenues were up 13 per cent at the third quarter, “maintained its strong performance in school, higher education, professional and international markets,” Pearson said.

The comments follow this week’s statement from McGraw-Hill that 2006 would be “more challenging” for its education business, and a warning in November that Reed Elsevier’s education revenues would also be below earlier expectations.

Analysts at Panmure Gordon said the update was “light on numbers” but “encouraging in itself given the recent downbeat guidance from the likes of Reed and McGraw Hill on school revenue trends in both 2005 and 2006.”

Penguin, Pearson’s consumer publishing business, “performed well” with new titles in the important Christmas period, and IDC, the financial data company in which Pearson has just raised its stake to 62 per cent, “expects to report its best year ever.”

Pearson will report preliminary results on February 27.

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