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Publishing

UPDATE 2-Pearson raises full-year guidance again

* Raises guidance even amid uncertain outlook

* 9-month sales up 7 percent

* Shares up 0.6 percent

(Adds details, quote)

By Kate Holton

LONDON, Oct 25 (Reuters) - British publishing group Pearson PSON.L raised its full-year outlook again on Monday, saying it now expected adjusted earnings per share to be up 10 percent due to growth in its U.S. College and Financial Times units. Analysts said Pearson, which had previously predicted adjusted EPS of around 70 pence or a 7 percent increase, could still surprise further, sending its shares up 0.6 percent.

The educational technology provider and Penguin Books owner said it had raised its guidance despite the uncertain macroeconomic outlook after posting a 7 percent rise in sales in the first nine months on constant exchange rates.

Sales at Penguin were up 5 percent, the education business was up 7 percent and the Financial Times group was up 11 percent, with the latter boosted by strong demand for its print, digital subscriptions and growth in advertising.

Overall adjusted operating profits were up 15 percent.

“The end of the year is a key selling season in education and consumer publishing, and both businesses face tough comparables in the fourth quarter of 2010,” the group said.

“However, we are trading ahead of previous guidance and we now expect full year adjusted earnings per share to increase by approximately 10 percent on the 2009 base of 65.4 pence.”

Analysts at UBS said the strong trading had been boosted by a good performance from the U.S. College unit and market share gains in U.S. schools. It said the 10 percent growth would imply an adjusted EPS of 72 pence.

“Pearson however have a track record of being conservative and with Q4 still sizeable for College/Penguin, we would expect Pearson to again beat guidance when they report full-year results in February 2011,” they said.

“We believe that consensus will ultimately move closer to our 74 pence of EPS,” they said.

In education, Pearson said its strategy of moving from a pure book publisher to the leading educational technology provider had enabled it to gain market share in the North American market, with sales growth of 5 percent.

The Higher Education unit grew strongly and gained market share while the Assessment and Information business remained strong. Pearson said its strength in digital was helping it to grow the School Curriculum business despite weakness in state and local funding.

“We are planning on the basis that school funding remains under pressure in 2011 and that the total new adoption opportunity will be lower than in 2010,” it said.

Sales in International Education were up 8 percent in the nine months, due to growth in developed markets and assessment services. Professional Education also traded strongly, with sales up 17 percent due to good growth in testing, IT and Professional segments.

The guidance includes the profit contribution from Interactive Data for seven months of 2010, compared with a full year in 2009, and assumes that the current exchange rate of 1 pound to $1.57 prevails in the fourth quarter. (Reporting by Kate Holton; Editing by Julie Crust and Jon Loades-Carter)

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