Under-pressure educational publishing giant Pearson PLC (LON:PSON) has posted a massive headline loss for 2016 as it battles a collapse in its biggest market in the US by writing down the value of the business.
The FTSE 100-listed firm, which has issued five profit warnings in four years, reported a statutory loss for the year of £2.335bn including an impairment of goodwill of £2.548bn.
The group said the impairment charge was “consistent with the challenging market conditions which we disclosed in January, and which resulted in an outlook for profit which is approximately £180m lower than previously anticipated.”
The former owner of the Financial Times saw its net debt increase to £1.1bn in 2016, up from £654mln the year before.
Pearson reported adjusted operating profit of £635mln for 2016, down 21% on the previous year, but slightly better than expected.
2017 in line so far …
The group said early trading in 2017 is in line with expectations.
It added: “The phasing in our North American higher education courseware business in 2017 will show a benefit from returns normalising in the first half, whilst the underlying market pressures we have described will impact gross sales primarily in the second half.”
Pearson's chief executive John Fallon said "2016 was a challenging year for Pearson, but we remain the global leader in education, with a strong market position.
"Our priorities for 2017 are clear. We will continue to accelerate our digital transformation, simplify our portfolio, control our costs, and focus our investment on the biggest growth opportunities in education."
As already flagged in January, Pearson said it will pay a final dividend of 34p, giving an overall 2016 payout of 52p in line with its guidance, but it intends to rebase its dividend from 2017 onwards.
In early trading, Pearson shares edged up 0.5%, or 3.5p to 649.5p.
In a note to clients, analysts at Liberum Capital said: "To the likely disappointment of some at least, there was no cost saving plan announced. However, cashflow performance was better."
They repeated a 'sell' rating on Pearson shares.
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