Ad Market In 2002 Will Be ‘Flat’ Says Pearson

Profits at Pearson fell by 12% in 2001 from £333 million in 2000 to £294 million, hit by the downturn in advertising. Sales increased 15% from £3,689m to £4,225m and operating profit, before goodwill and exceptional items, increased 3% to £426m excluding profits from PearsonÂ’s 22% stake in the RTL Group, the disposal of which was announced in December 2001. The 2001 figures include the first full-year contributions from Dorling Kindersley and NCS Pearson and losses from internet enterprises, which reduced by 30% to £137 million from £196 million.

Adjusted earnings-per-share fell 29% to 22.5p and profits from newspaper and television advertising-related operations were £116 million lower than in 2000. Underlying sales were flat year-on-year and operating profits fell 2%.

Looking ahead to 2002, Pearson expects a number of factors to contribute to a ‘significant recovery’ in adjusted earnings per share. Action taken to cut costs in 2001 is expected to reap benefits and losses from internet enterprises are anticipated to fall by more than 50% largely due to FT.com which is expected to break even in Q4 2002. Profits made from the sale of Pearson’s stake in RTL (see Pearson Agrees Sale Of RTL Stake) have been used to reduce Pearson’s net debts.

Marjorie Scardino, PearsonÂ’s chief executive, said: “The recession in advertising and technology markets meant that it was not possible last year to build on the steady improvement in performance which our shareholders have come to expect. Good growth in our less cyclical businesses allowed us to keep the overall level of sales and profit roughly level with the year before and, as we look ahead into 2002, we are confident of resuming our progress whatever the economic climate.”

Shares in Pearson had risen by 55½p to reach 858p by 11am this morning.