Pearson raises payout after sale of Financial Times

A logo of Japan's Nikkei newspaper is displayed atop its headquarters building in Tokyo on Friday. Japanese media group Nikkei has agreed to buy the Financial Times from Britain's Pearson for $1.3bn, putting one of the world's premier business newspapers in the hands of a company influential at home but little known outside Japan.

Reuters/London

Pearson, the British group selling the Financial Times in a $1.3bn deal, increased its dividend and confirmed guidance on Friday despite a dip in first-half operating profit, partly on the timing of textbook adoption in the US.

The company, which is focused on education after agreeing to sell the newspaper to Japan's Nikkei, said first-half operating profit fell 4% to £72mn ($112mn).

Pearson, which increased its interim dividend by 6% to 18 pence a share, said sales rose 1% to £2.2bn.

The company's results are weighted towards the second half, which includes the start of the academic year, and the first-half period contributes only about 10% of full-year operating profit.

It said it still expected full-year earnings per share of between 75 pence and 80p, although the sale of PowerSchool in June would reduce EPS by about 1p, while exchange rates could take another 2p off.

Analyst Ian Whittaker at Liberum noted the group had reiterated guidance at the half-year stage in 2014 only to warn later, so the first-half was not a great indicator.

Pearson did not quantify the impact of the sale of the FT, although it said the newspaper contributed about £24mn of net profit.

The sale of the asset would generate net proceeds of between £650 and 700mn, more than analysts expected, Citi said, and if used to pay debt, it could cause a "mild accretion" to consensus EPS.