Pearson turns corner as ad revenues pick up

Pearson, the newspaper’s owner and the world’s largest education publisher, said yesterday that ad bookings at the title were currently level with those a year ago, with forward bookings "a little ahead".

Lord Dennis Stevenson, the Pearson chairman, said at its annual meeting: "Advertising revenues appear to be stabilising, and it does look as though we may be past the worst of the advertising recession."

However, he cautioned: "The improvements we’re seeing vary week to week, but trading prospects for Pearson are better than at any time in the past three years."

The comments follow 12 successive quarters of declining revenues at the title, which last year reported a 9 per cent fall in sales as operating losses grew by 39 per cent to 32 million. Advertising volumes are still nearly two-thirds lower than at their 2000 peak.

The City liked the look of the figures, but Lord Stevenson’s words were not enough to spark much life into Pearson’s shares.

They closed the day down 1 per cent at 658p. For the year they have so far risen 5.2 per cent.

"It’s a substantial improvement, the first increase in a long, long time," said Charles Stanley analyst Omar Sheikh.

"Advertising is still volatile but it’s an improving trend," added Derek Terrington, an analyst at Commerzbank. "Still, Pearson is not a cheap share," as he rated the stock "underweight".

Lord Stevenson said he expects revenues for Pearson’s school publishing business, which is headed by its Penguin brand, to be roughly flat in 2004, with an increase in US state and federal budgets compensating for a low point in the cycle of textbook adoption.

He expects its higher-education business to grow four to six per cent, and its professional-education unit to increase revenue and profits. The company also has a successful testing business, which provides exam administration for schools and universities.