By Simon Zekaria
LONDON--Pearson PLC (PSON.LN) said Friday that it swung to a
first half loss as the U.K.-based publisher continues to
restructure its business to sharpen its focus on digital education
and high-growth markets.
Pearson, which publishes U.K. newspaper the Financial Times,
said it swung to a net loss of GBP8 million in the first six months
from a profit of GBP36 million a year earlier. Sales rose 8% at
constant exchange rates to GBP2.8 billion.
The group's earnings were also hit by costs from discontinued
operations related to the merger of publishing businesses Penguin
and Random House.
FT Group sales were flat year-on-year, but with digital
subscriptions up 14%.
Analysts say 2013 and 2014 are years of transition for the
publishing giant, as the world's largest publisher of educational
materials accelerates the shift of its education businesses to
emerging economies and prioritizes digital content, software and
services over print-based publishing.
Heading into the second half of the year, Pearson said it is
trading in line with expectations and reiterated that it sees gross
restructuring costs of approximately GBP150 million in 2013.
Pearson is a major player in the education industry in North
America, publishing school textbooks and producing educational
software for teachers and pupils, but the business is under
pressure from digital schoolbooks, online learning and tablet
computers. In February it warned of weak market conditions for its
developed world and print publishing businesses.
It is growing its international business in emerging markets,
including China, Brazil and India, where the education business is
boosted by rising enrollment numbers across a rapidly growing
middle class.
"In trading terms, 2013 has begun much as we expected. In
general, good growth in our digital, services and developing-market
businesses continues to offset tough conditions for traditional
publishing," said Chief Executive John Fallon.
Adjusted operating profit--which strips out currency exchange
rate fluctuations, acquisitions, disposals and the depreciation of
assets and is one of the key figures tracked by U.K. analysts--fell
26% to GBP137 million, as the company took a hit from restructuring
charges and invested in a pipeline of products.
It declared an interim dividend of 16 pence a share, up 7% from
a year earlier.
Pearson shares closed Thursday at 1,252 pence, valuing the
company at GBP10.24 billion.
Write to Simon Zekaria at simon.zekaria@dowjones.com
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