Ad Drought Slashes Pearson Profits by 12%

04 March 2002

The Pearson group, whose standard-bearer is the Financial Times, last Friday reported a twelve per cent slump in profits for the year ended December 2001.

Blaming the advertising recession, Pearson attained a pre-tax profit of £294 million versus £333m in 2000 – nonetheless a substantial improvement on the £271m predicted by analysts, and triggering a 7.34% hike in its share price to £8.265 when London trading opened this morning (Monday).

Hardest hit within the Pearson empire was the newspaper division led by the Financial Times where ad revenues sagged twenty per cent – and even more by volume which fell 29%. French sister-title Les Echos reported ad revenues down 20% and volume down 21%.

Full-year operating profit for the FT Group (including the internet businesses which, with revenues of £51m, was 21% up on 2000) slid 27% from £98m in 2000 to £72m in 2001. Nor have January and February of this year witnessed any improvement in ad sales.

However, as is the way of chief executives in lean times, Marjorie Scardino focused on the positive: “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.”

Among the “less cyclical” achievers were the Penguin paperback book business which recorded sales growth of 98%. The educational division, however, was sent to the back of the class with profits down by 5%. And Pearson wrote off £153m during the year, of which some £50m related to the purchase of publisher Dorling Kindersley

Data sourced from: Financial Times; additional content by WARC staff