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Pearson keeps full-year view on strong income

BRITISH publishing group Pearson is trading ahead of its expectations, allowing it to keep its full-year outlook in spite of adverse currency effects, lifting its shares by nearly 10 percent yesterday.

Pearson reported strong earnings and flat underlying sales for the first half of the year, as an improvement in revenue at its educational publications business - the world's largest - offset declines at the FT Group and at consumer book division Penguin.

"Over the past six years, Pearson has delivered substantial growth; this year is about proving our resilience and competitive edge," Chief Executive Marjorie Scardino said in a statement. "So far, we've passed the test."

The company said a weaker US dollar meant it was effectively upgrading by 3 pence its 2009 guidance for keeping adjusted EPS at at least 57.7 pence (94 US cents). Its forecast assumes the current rate of US$1.64 to sterling prevails in the second half.

"Although for 2009 we have favored rotation into quality cyclicals, today's results are impressive and we would expect the stock to rebound from the weakness seen going into the results," analysts at brokerage Numis wrote in a note.

Shares in Pearson traded up 9.75 percent at 665 pence by 0803 GMT, making it Europe's top blue chip gainer and easily outperforming a European media index that rose 1 percent.

The results were the first test this quarter of the continued resilience of professional publishers to the recession. Competitors Wolters Kluwer, McGraw-Hill and Reed Elsevier will report in the coming weeks.

Pearson's strong educational business with market-leading testing and digital products, as well as a cut in its exposure to the advertising market to just 3 percent of total sales, have made it a favorite defensive stock.

The firm said the impact of US economic stimulus measures on its North American education business was unclear, but it expected to continue outperforming a falling US school publishing market.


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