Pearson has reported a 21% slump in its overall operating profit for 2013, as its core US education business continues to be hit by the "worst trading conditions" seen in decades. However, profits at the company's FT Group, home of the Financial Times, were up 17% to £55m.
FT Group, which includes the Financial Times and Pearson's 50% stake in the Economist Group, reported sales of £449m, down 1% year-on-year, but operating profits were up 17% on 2012.
Pearson chief finance officer Robin Freestone said that the FT is a profitable entity in its own right.
Digital subscribers to FT.com grew 31% year-on-year to 415,000 and now represent almost two-thirds of the FT's total paying audience, powered by a 60% upsurge in corporate users.
THE HTML app, which launched in 2011 and bypasses Apple iTunes so as to have a direct relationship with readers, was performing "extremely well", the group said.
Mobile now accounts for nearly a quarter of all new subscriptions at the FT, it added.
FT.com digital subscriptions of 415,000, more than offset the planned reductions in print circulation, the group said.
However, the group said print advertising continued to be short-term and "generally weak", though the FT increased its market share with luxury and financial sectors.
Overall, advertising revenues accounted for 37% of FT Group revenues in 2013, compared to 52% in 2008.
Recent changes such as redesigns to mobile apps and improvements to FT.com had helped signifcantly increase overall digital engagement, the group said.
Operating profits at the Economist Group were up 3% on 2012.
Pearson's full-year figures for 2013, published on Friday, follow a dire trading update Pearson gave in January, when it informed the market that operating profits would be below analysts' estimates.
Adjusted operating profits at Pearson's North American business were down 24% to £406m, partly due to £49m restructuring costs, as it was hit by major cutbacks in public spending.
Overall, Pearson's operating profit was down 21% year-on-year to £736m, on revenues up 2% to £5.28bn.
Pearson's North American education business, which makes up more than half the group's revenues, has been hit by schools and colleges deferring spending on educational materials while college enrolments in the US are temporarily lower.
The group's educational business, outside of North America, has also been hit, with profits down 24% to £140m.
But Fallon said the group was in the second year of a "short, sharp" transition which would see the education business more focused on digital education and growing again by 2015.
Pearson said book publisher Penguin Random House – the joint venture between Pearson and Bertelsmann's Random House – traded well in the second half of the year.
The merger was completed in July 2013 and Pearson said its performance had been boosted by a strong bestseller performance in all its markets.
Pearson owns 47% of the joint venture, and its share of revenues for the six months from July was £513m, with an adjusted operating profit of £78m.
In 2012, Penguin's full-year revenues were £1.053bn, with an adjusted operating profit of £98m.
Bestsellers in 2013 in the UK included Dan Brown's Inferno; David Jason's My Life, Jamie Oliver's Save with Jamie and Helen Fielding's Bridget Jones: Mad About the Boy.
In the US, Penguin Random House published 480 New York Times bestsellers, including Inferno, John Grisham's Sycamore Row and Khaled Hosseini's And the Mountains Echoed.
Pearson's share price was down 7.78% to 992p at about 9.30am on Friday.
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