Good performance from eBooks fails to rescue Pearson
Adjusted EPS was 84.2p (86.5p in 2011).
Operating cash flow was £788m (£983m in 2011).
Return on invested capital was 9.1% (9.1% in 2011).
The Penguin books publisher said market conditions were generally weak in the developed world and for print publishing businesses; generally strong in emerging economies and for digital and services businesses.
The group sees a considerable growth opportunity in education driven by rapidly-growing global middle class, adoption of learning technologies, the connection between education and career prospects and increasing consumer spend, especially in emerging economies.
North American Education revenues were up 2% in a year when US School and Higher Education publishing revenues declined by 10% for the industry as a whole.
International Education revenues rose 13% with emerging market revenues up 25%.
FT Group revenues were up 4% with the Financial Times' total paid print and online circulation up to 602,000; digital subscriptions exceed print circulation for the first time.
Penguin revenues rose 1%, with strong publishing performance and eBooks now 17% of sales.
Pearson announced gross restructuring costs of approximately £150m in 2013 (£100m net of cost savings achieved in the year), focused on:
1. significantly accelerating the shift of Pearson's education businesses towards fast-growing economies and digital and services businesses;
2. separating Penguin activities from Pearson central services and operations in preparation for the merger of Penguin and Random House.
Restructuring is expected to generate annual cost savings of approximately £100m in 2014.
In 2014, £100m of cost savings to be reinvested in organic development of fast-growing education markets and categories and further restructuring, including the Penguin Random House integration.
From 2015, restructuring programme is expected to produce faster growth, improving margins and stronger cash generation.
Pearson expects tough trading conditions and structural industry change to continue in 2013.
Excluding restructuring costs and including Penguin for the full year, Pearson expects to achieve 2013 operating profit and adjusted EPS broadly level with 2012.
John Fallon, CEO, said: "Pearson has a sound, successful strategy: now we are significantly accelerating its implementation. Trading conditions are tough and structural changes mean many of our traditional publishing activities are under pressure. But the underlying demand for effective education remains immensely powerful and our developing world and digital services businesses have real scale and momentum. The restructuring of the company that we are announcing today is designed to strengthen dramatically Pearson's position in digital education services and in our most important markets for the future - and to enable us to capture the once-in-a-generation opportunity that comes with being the world's leading learning company."
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