International media group, Pearson, has today issued its trading statement for 2004, revealing a drop in profit in the second half of the year, attributed to declines in advertising spending and paperback sales.
Pearson reported that adjusted pre-tax profits fell from £410 million in 2003, to £386 million in 2004, with the company citing a weak performance at its book publishing division, Penguin, as the main cause.
The company’s newspaper division faired much better, with the Financial Times strengthening throughout 2004, reiterating predictions made earlier in the year(see Financial Times Will Break Even For 2004). Sales of the paper enjoyed a 3% increase, while advertising revenues continued the upward trend, climbing by 2%. The flagship publication had a full year operating loss of £9 million in 2004, compared with a loss of £32 million the previous year.
Commenting on the results, Marjorie Scardino, chief executive said: “In 2004 we achieved solid progress on all our financial goals and gained in most of our markets. At the same time, we reduced costs and invested more than ever in the content and technology that set our products apart.”
She continued: “This year, we continue to expect strong growth at Pearson Education and the Financial Times Group, and we are confident that our performance will be within market expectations, even while we tackle some challenges at Penguin. In the longer term, we have set the stage for a new phase in Pearson’s growth, with our network of businesses for the next few year.”
The trading statement also revealed that adjusted operating profit from continuing businesses were up by 7% in 2004, and a dividend increase of 5% ahead of inflation for the 13th successive year.
Pearson also announced the retirement of Dennis Stevenson as the Groups chairman this morning. Stevenson has been with Pearson for 18 years, spending eight years as chairman and is due to leave later in the year.
Stevenson said: “The board and I have naturally been discussing plans for my succession for some time, and this is good moment to formalise the process. Pearson is in excellent shape, looking forward to some very good years under a strong executive team led by Marjorie.
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