Pearson Raises Outlook (Again)

From their press release this morning:

• Sales up 6% and operating profit up 13%*
• All businesses trading as expected
• Adjusted EPS now expected to be approximately 83p per share, benefiting from lower interest and tax

Pearson, the world’s leading learning company, is today providing its regular nine-month interim management statement.

Pearson increased sales by 6% and operating profit by 13% in the first nine months of 2011. Our businesses once again produced strong competitive performances in generally weak market conditions, benefiting from premium content and services, digital innovation and presence in developing economies.
The fourth quarter is always a key selling season in education and consumer publishing. But with all of our businesses performing well, we are reaffirming our trading guidance for the full year in spite of the recent deterioration in the macroeconomic outlook.
In addition, we anticipate that our interest and tax charges on adjusted earnings will be lower than our previous guidance. As a result, we now expect to achieve adjusted earnings per share of approximately 83p for the full year (ahead of our previous guidance of approximately 80p). This guidance assumes that the current exchange rate of £1:$1.60 prevails in the fourth quarter.
Pearson’s chief executive Marjorie Scardino said: “The world economy is neither simple nor helpful this year, but we are producing another good year for Pearson. Our mix of markets and services, as well as our ability to invest and to implement, has given us competitive strength that makes us confident of that. We can’t count on the trading environment to get any easier any time soon, but we do expect our durability and our innovation to continue to help us succeed.”

This is the section of the press release specific to Education:

In education, our long-term investment in technology and services is enabling us to achieve sustained growth, even in tough markets for education materials. For our education company as a whole, sales are up 7% in the first nine months of the year.

In North America, textbook publishing markets have been weak in 2011, affected by state budget pressures, the transition to Common Core standards and slower college enrolments. For the first nine months of the year, total sales for the US School and College textbook publishing industries declined by 11% and 2% respectively, according to the Association of American Publishers. 

Even so, Pearson’s sales in North American Education were up 1% as our leadership in digital learning continued to produce market share gains. In Higher Education, we generated more than eight million student registrations for our subject-specific digital homework and assessment programmes (the MyLabs), and almost five million enrolments in online courses provided through Pearson’s LearningStudio (formerly known as eCollege). These student registrations represent growth rates of 23% and 33% respectively over the same period last year. 

Our Assessment and Information business remained resilient with good growth in clinical and diagnostic assessments and automated online test scoring outweighing lower national test revenues. 

Our School Curriculum business continued to face state budget pressures, a smaller new adoption opportunity (of approximately $660m) and uncertainty caused by the pending transition to Common Core standards. It benefited from the particularly strong performance of our blended print-and-digital programmes in new adoptions, helping Pearson to win an estimated 37% share of new adoptions in which we competed. In September, we announced the acquisition of Connections Education which operates virtual public schools in 21 states in the US and served more than 40,000 students in the current school year. 

Sales in International Education were up 19% after nine months. By product line, we achieved good underlying growth in English language learning, assessment and higher education; and by geography in China, the Middle East and Italy. We are also benefiting from the contribution of our newer services businesses including English language schools around the world and universities in South Africa. School textbook publishing has tended to be relatively weak, particularly in markets where purchases are publicly-funded. In the first nine months, MyLab registrations outside North America were up more than 30% on the same period last year to more than 600,000. In August, we announced the acquisition of Stark Holding, a leading provider of education materials including test preparation resources for pupils and teachers in Germany. 

In Professional Education, sales were up 21%. We continued to see good growth in Professional Testing, which administered almost six million tests in the first nine months of the year, benefiting from sales of additional services to existing customers. We are also investing in a major strategic partnership with the American Council on Education to develop an online General Educational Development (GED) test aligned with new Common Core standards. Market conditions in our professional publishing business remained challenging but our digital programmes performed well. We continued to benefit from our growing presence in professional training, as Pearson in Practice (formerly known as Melorio) grew well despite tougher conditions in construction training. In October we announced the acquisition of TQ, which provides vocational and technical education and training services to governments, institutions and corporations around the world. 

Even so, Pearson’s sales in North American Education were up 1% as our leadership in digital learning continued to produce market share gains. In Higher Education, we generated more than eight million student registrations for our subject-specific digital homework and assessment programmes (the MyLabs), and almost five million enrolments in online courses provided through Pearson’s LearningStudio (formerly known as eCollege). These student registrations represent growth rates of 23% and 33% respectively over the same period last year. 

Our Assessment and Information business remained resilient with good growth in clinical and diagnostic assessments and automated online test scoring outweighing lower national test revenues. 

Our School Curriculum business continued to face state budget pressures, a smaller new adoption opportunity (of approximately $660m) and uncertainty caused by the pending transition to Common Core standards. It benefited from the particularly strong performance of our blended print-and-digital programmes in new adoptions, helping Pearson to win an estimated 37% share of new adoptions in which we competed. In September, we announced the acquisition of Connections Education which operates virtual public schools in 21 states in the US and served more than 40,000 students in the current school year. 

Sales in International Education were up 19% after nine months. By product line, we achieved good underlying growth in English language learning, assessment and higher education; and by geography in China, the Middle East and Italy. We are also benefiting from the contribution of our newer services businesses including English language schools around the world and universities in South Africa. School textbook publishing has tended to be relatively weak, particularly in markets where purchases are publicly-funded. In the first nine months, MyLab registrations outside North America were up more than 30% on the same period last year to more than 600,000. In August, we announced the acquisition of Stark Holding, a leading provider of education materials including test preparation resources for pupils and teachers in Germany. 

In Professional Education, sales were up 21%. We continued to see good growth in Professional Testing, which administered almost six million tests in the first nine months of the year, benefiting from sales of additional services to existing customers. We are also investing in a major strategic partnership with the American Council on Education to develop an online General Educational Development (GED) test aligned with new Common Core standards. Market conditions in our professional publishing business remained challenging but our digital programmes performed well. We continued to benefit from our growing presence in professional training, as Pearson in Practice (formerly known as Melorio) grew well despite tougher conditions in construction training. In October we announced the acquisition of TQ, which provides vocational and technical education and training services to governments, institutions and corporations around the world.