Pearson Plc, the education company that is selling the Financial Times to Japanese publisher Nikkei Inc., reported a decline in first-half profit as demand for textbooks continued to shrink and fewer students enrolled in college.
Operating profit adjusted for some items fell to 72 million pounds ($112 million) from 73 million pounds a year earlier, London-based Pearson said Friday. Sales rose 5 percent to 2.16 billion pounds, compared with the average estimate in a Bloomberg survey of analysts of 2.17 billion pounds.
Chief Executive Officer John Fallon said Pearson is continuing its shift to digital operations and focus on emerging markets to counter a slowdown in mature markets in the U.S. and U.K. The sale of the Financial Times, announced yesterday, gives Pearson the flexibility to bolster the education business through acquisitions, said Jonathan Helliwell, a media analyst at Panmure Gordon & Co. in London.
Nikkei will pay 844 million pounds for the FT Group, which owns the paper and a handful of other media properties, in an effort to become more global and boost its digital growth. The divestment doesn’t include Pearson’s 50 percent holding in the Economist Group and some London property.
Shares of Pearson advanced 1.7 percent to 1,255 pence at 8:01 a.m. in London. The company announced the Financial Times sale late in the trading day yesterday.
While Pearson gets almost all its profit from education, the company has struggled the past two years with job cuts and a reorganization to boost investment in digital services and emerging markets. It’s spending another 30 million pounds this year in part to expand online products.
Fallon, who rose through the ranks of the education business before winning the top job at the company in 2013, has touted Pearson’s transformation into “a global learning services company.”
Pearson reiterated its full-year adjusted earnings per share forecast of 75 pence to 80 pence.
Fallon may turn next to disposing of Pearson’s 47 percent stake in book-publishing venture Penguin Random House. Bertelsmann SE, Europe’s biggest media company, owns the other 53 percent. Beginning in October, Pearson has the option to sell its stake under a shareholder agreement. People familiar with the matter said last year that Bertelsmann intended to buy all or part of the stake as soon as this year.
Besides textbooks, Pearson’s products include online materials to help teachers plan their lessons, online educational games and reference materials, standardized tests, vocational qualifications as well as college and career readiness training.