PSO Pearson Plc

By Adria Calatayud

Pearson PLC (PSON.LN) reported results for 2018 on Friday. Here's what you need to know:

SALES: The FTSE 100-listed education company posted sales of 4.13 billion pounds ($5.39 billion) for 2018, 8.5% down compared with GBP4.51 billion a year earlier and slightly below analysts' expectations of GBP4.15 billion, according to a consensus estimate provided by Pearson. On an underlying basis, revenue fell 1%.

ADJUSTED OPERATING PROFIT: London-based Pearson made an adjusted operating profit of GBP546 million, ahead of its guidance range GBP540 million to GBP545 million. Adjusted operating profit was 5.2% lower than in 2017, but up 8% on an underlying basis. Pretax profit rose 18% to GBP498 million.

WHAT WE WATCHED:

-U.S. CHALLENGES: Pearson generates two thirds of its revenue in North America and its key business there, U.S. higher education courseware, remains under structural pressure as college enrolments continue to decline, analysts at Numis said. The company reiterated guidance of an underlying revenue fall of up to 5% from U.S. higher education this year.

-STREAMLINING: The company's cost-cutting program is progressing ahead of plan, with expected annualized savings of more than GBP330 million by the end of this year, it said. Pearson also sold its U.S. K12 publishing unit earlier this week, after a process that lasted more than a year.

-DIGITAL TRANSFORMATION: Pearson said its digital transformation is progressing according to plan. Last year, the company generated 34% of its revenue from digital operations, while 28% was from digitally enabled activities and the remaining 38% from nondigital. However, analysts at Liberum said this shift is happening slowly, noting that 32% of the group's revenue was already digital in 2017.

Write to Adria Calatayud at adria.calatayudvaello@dowjones.com

(END) Dow Jones Newswires

February 22, 2019 08:08 ET (13:08 GMT)

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