Financial Times Set To Break Even For 2004
International media group, Pearson, has issued a positive trading update ahead of its 2004 preliminary results announcement on 28 February, stating that flagship publication, the Financial Times, is on course to break even in the fourth quarter, reiterating expectations in the Group’s November trading update.
The announcement follows hard hitting cost-cuts within the company over previous months, with Pearson operating an extensive £7 million cost cutting drive at the Financial Times alone. The newspaper recently closed its respected Creative Business supplement, following its inability to generate sufficient advertising revenue, a move which reportedly saved the paper around £400,000 a year (see FT Pulls The Plug On Creative Business).
The cost cuts appear to have paid off for Pearson, as the FT makes a return to the black after nearly three years of struggling. However, the newspaper’s circulation has seen a decline recently, losing 1.9% year on year in the six months to December. The paper’s total circulation now rests at 426,369.
Elsewhere Pearson announced larger than expected growth for its Higher Education Business Group, growing ahead of the industry for the sixth year running, and remains on track to achieve underlying progress in earnings, cash and return on invested capital in 2004. The company also expects to report adjusted earnings per share of approximately 30p and substantial growth in free cash flow.
A significant acceleration in financial performance is predicted by the company throughout 2005, driven by a strong outlook for the education business. Meanwhile, Pearson’s book publishing business, Penguin, suffered during 2004, as tough trading conditions persisted through the holiday season, particularly in the US market and backlist titles.
Pearson expects a reduction in interest and tax charges compared with 2003, with the full year average exchange rate predicted to be £1:$1.83 (against £1:$1.63 in 2003), reducing the company’s adjusted earnings per share by approximately 4p compared with last year.
In their trading statement, Pearson also announced that they had voted their shares in MarketWatch Inc, in favour of Dow Jones’s proposed acquisition of MarketWatch, with the expectation to receive proceeds of approximately $100 million on completion of the transaction.
Financial Times: 020 873 3000 www.ft.com
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