LONDON (Reuters) – Pearson <PSON.L> expects its full-year profit to come in at the bottom of its guided range, the British education company warned on Thursday, blaming weaker-than-expected trading in its U.S. higher education courseware business.
Pearson, former publisher of The Economist magazine and Financial Times newspaper, had forecast adjusted operating profit of 590-640 million pounds.
The provider of textbooks, courseware and testing has been hit in recent years by changes in the U.S. market as students sought to save money by buying second-hand books, hammering its sales and profit.
The group said it still expected overall revenue to stabilise this year.
For the first nine months of the year, Pearson expects underlying revenue to be broadly flat with core markets up 5%, growth markets up 3% and North America down 3%.
It said revenue in the U.S. higher education courseware business was expected to be down by around 10% at the nine months stage and decline 8% to 12% on the year – weaker than its original guidance for a 0% to 5% fall.
“The third quarter has been significantly weaker than we expected in U.S. higher education courseware. Whilst difficult in the short term this places more importance on our work to remake this part of Pearson,” said Chief Executive John Fallon.
The group said it was still on track to deliver more than 330 million pounds in annualised cost savings, with the full benefits accruing from the end of 2019 onwards. It forecast year end net debt to be broadly in line with 2018.
(Reporting by James Davey; editing by Guy Faulconbridge and Jason Neely)