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Pearson sees 2017 profits of up to £575m as US continues to weigh
Publishing group Pearson said it expected 2017 adjusted operating profit around £570m-575m and adjusted earnings per share of 53.5p-54.5p at effective exchange rates, as lower US educational sales still dragged on the company.
At guidance exchange rates adjusted operating profit was expected to be at the upper end of forecasts at £600m-£605m at guidance exchange rates.
"We expect growth from that base and are giving guidance for 2018 adjusted operating profit of between £520m and £560m," Pearson said.
Total underlying revenues fell 2%, in line with the performance in the nine-months, due to a decline of 4% in North America partly offset by stabilisation in Pearson's core and growth operations.
Sales in US higher education courseware were down 3% on an underlying basis, in line with the lower end of Pearson's revised guidance range, due to the continuation of trends seen in the first nine-months combined with cautious buying behaviour partners in the fourth quarter.
For 2018 Pearson said it expected revenues at its US higher education courseware business to be flat to "mid-single digit percent" due to lower college enrolments, increased use of Open Educational Resources and attrition from growth in the secondary market.
This would be partially offset by growth in digital revenues and benefits from its restructuring plans.
It forecast adjusted earnings per share of 49p to 53p.
Pearson said recent US tax cuts would result in an unchanged medium-term group effective tax rate remains unchanged of 20-22%, based on adjusted operating profit including the taxed contribution from its stake in Penguin Random House.
It added that the cut would result in a small, one off deferred tax charge in 2017, which will be excluded from adjusted operating profit and adjusted effective tax rate.