Publishing company, Pearson issued its trading update on Wednesday revealing full year results at the upper end of guidance but warns that it expects revenues to be flat in US higher education textbook business.
The educational publisher, said its profits would reach the upper end of its October 2017 guidance range to £605m. The company said based on average effective exchange rates in 2017 it expects to report adjusted operating profit around £570m to £575m and adjusted earnings per share of 53.5p-54.5p above guidance of 49p-52p based on an improved tax rate.
Sales in US higher education courseware declined 3% in the nine months to the end of 2017 and it doesn’t see any let up and says, “we expect revenues to be flat to down mid-single digit percent due to the similar underlying pressures seen in the last two years from lower college enrolments, increased use of Open Educational Resources and attrition from growth in the secondary market”.
Tax cut impact
However, progress in the group's digital business offsets some of the bad news. Pearson said that it made good progress with its digital transformation and grew its US higher education digital courseware revenue by around 9%. Additionally, it has seen revenues rise after it lowered ebook rental prices.
The company also said US tax reform to “result in a small, one-off deferred tax charge in 2017”.
Pearson’s chief executive, John Fallon said: "We made good progress in 2017 on the simplification of our portfolio, the strengthening of our balance sheet and delivered results at the top end of guidance. Our restructuring programme is on track and our 2017 performance has set us up well to make further progress against our strategic priorities and grow profit in 2018.”