Pearson swings to loss

July 30, 2001 Posted: 0935 GMT

LONDON (CNN) -- UK media company Pearson on Monday swung to a first-half loss as advertising revenues dropped and it felt the effects of the global slowdown.

Pearson said losses in the six months to June 30 were £137 million ($195 million), a loss per share of 17.2 pence, compared with a profit of £88 million, or earnings per share of 12.7 pence, in the first-half of 2000.

The company, which is the world's No. 1 publisher of educational books and owns the Penguin publishing house and the Financial Times newspaper , said revenues rose 21 percent to £1.87 billion from £1.54 billion in the year-ago period.

But the company's earnings suffered from the effects of the global economic slowdown on ad revenue, the costs of continued investments and losses from its Internet ventures.

"The depressed advertising market has affected our business newspapers, although each of them is still reporting good profits and a strong competitive positions," said Chief Executive Marjorie Scardino.

Pearson warned that while its educational book publishing business was on track to deliver revenue and profits growth in line with expectations this year, the FT Group was expected to suffer a 15 percent fall in profits compared with 2000.

Profits fell in the first six months at its market-leading financial newspapers, the FT,  Les Echos. In France and Recoletos in Spain.

Operating profit at the FT dropped 36 percent to £32 million compared with £50 million in the same quarter a year ago, even as daily sales in June rose 6 percent to 490,000 compared with June 2000.

The Pearson education division continued to perform strongly and the company expects its U.S. school and U.S. college businesses "to grow as fast as or ahead of their markets this year."

The company said pretax profits before goodwill rose to £5 million after investment in Internet-related ventures of £88 million.

This compares to a previous loss of £4 million and analyst forecasts for a loss of between £6 and £36 million, according to analysts surveyed by Reuters.

When CEO Scardino took the helm at Pearson in 1997 she pledged to double the share price from 666 pence in five years and boost earnings per share by selling assets such as waxworks museum Madame Tussaud's and refocusing on media and education.

By this time last year, Pearson was meeting those goals, as the 52-year-old Texan CEO made a series of acquisitions such as education publisher Simon & Schuster and UK children's publisher Dorling & Kindersley.

But Pearson shares have underperformed the media sector by around 10 percent this year and are well below a peak of £23 reached in March of 2000.

Pearson stock (PSON) fell 2.7 percent to £10.10 in London trading after the results were announced.

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