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Pearson 2019 profit constrained by textbook slump

The company warned in January that its 2020 profit would be lower than market expectations as textbook sales continued to slide. It also at that time downgraded its 2019 forecast for operating profit to about 590 million pounds.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

British education group Pearson reported a 6% rise in operating profit to 581 million pounds ($748.7 million) for 2019, slightly below guidance lowered last month, as falling textbook sales in North America offset growth elsewhere.

The company warned in January that its 2020 profit would be lower than market expectations as textbook sales continued to slide. It also at that time downgraded its 2019 forecast for operating profit to about 590 million pounds.

Chief Executive John Fallon, who will retire this year, has over his seven year tenure sought to turn Pearson into a world leader in digital education, while at the same time sales of profitable college textbooks have fallen precipitously.

"The future of learning will be increasingly digital and we have built, by revenue, by far the world's leading digital learning company," he said on Friday.

But the digital transformation has been painful for investors, with the company's shares falling 35% in the last 12 months alone.

Pearson plc

Sell: 524.20 | Buy: 525.60 negative 4.40 (-0.83%)
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It said it expected the 2019 trend in U.S. higher education courseware to continue this year, with heavy declines in print partially offset by modest growth in digital.

For 2020 it is forecasting operating profit of between 410 million and 490 million pounds, after excluding the contribution from its 25% stake in Penguin Random House, which it is selling to Bertelsmann.

($1 = 0.7760 pounds) (Reporting by Paul Sandle; editing by Sarah Young)


Copyright (2020) Thomson Reuters.This article was from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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