Education business boosts earnings for publisher

Pearson, which owns the world’s largest education technology and publishing business as well as The Financial Times and Penguin books, reported an 18 per cent rise in adjusted earnings per share of 77.5p on 8 per cent higher sales of £5.66bn.

Ms Scardino, one of Britain’s highest-profile female chief executives, said she expected sales, margin and adjusted EPS growth in 2011, although trading conditions in some of its markets would remain tough.

“Our two major markets are the US and UK, and in both markets there are budget difficulties,” she said.

“But we have put ourselves in a position of being able to do well in tough markets as well as in fulsome markets.”

US states have cut school textbook spending, hitting Pearson and competitors like McGraw-Hill, but Ms Scardino said this would be more than offset by growth in testing, where Pearson is making a big push into electronic formats, and higher education.

“The school adoption business (texbook sales) is going to be lower this year than it was last year and we are going to participate in less of it,” she said. “Nevertheless, our assessment business is going to be good.”

“What we have said is North America (education) is our biggest business and we are predicting it is going to grow this year.”

Pearson has grown its education business in emerging markets such as China, India, Brazil and South Africa, and Ms Scardino said she would be looking for similar bolt-on deals in 2011. “We are never done (on acquisitions),” she said.

Analysts at brokerage Numis said the numbers were robust and noted the group was confident in its outlook, despite some of its markets remaining weak.

Pearson said The Financial Times, where sales rose 12 per cent, benefited from a recovery in advertising from the dismal market of 2009, although visibility remained poor.

The division was also boosted by subscriptions for digital delivery of its content.

Sales at Penguin, up 5 per cent, were helped by Jamie Oliver’s 30 Minute Meals, Stephen Fry’s The Fry Chronicles and bestsellers from Tom Clancy and Patricia Cornwell.

Digital book revenue, for devices like Amazon’s Kindle, rose 182 per cent and accounted for 6 per cent of Penguin’s revenue worldwide, the company said.

About 3 per cent of Pearson’s shares are owned by the Libyan Investment Authority, a stake subject to a UK government freeze on the country’s leader Muammar Gaddafi’s assets, on Sunday.