Pearson suffers third successive fall in earnings: Problems in oil services wipe out growth in book publishing and newspapers
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Your support makes all the difference.PEARSON, the conglomerate that owns Lazards, Madame Tussaud's and the Financial Times, yesterday lifted its dividend despite a fall in earnings for the third year running.
Strong profits growth in book publishing was more than wiped out by problems in the oil services division, where operating profits collapsed from pounds 34.7m to pounds 500,000.
Pre-tax profits fell 16 per cent to pounds 150.8m. However, the stock market, which had been fearing worse, marked the shares 27p higher to 404p.
The final dividend was raised from 6.25 to 6.625p, making a 12p total. Lord Blakenham, chairman, said the strong cash flow - a positive pounds 46m - justified the increase.
Oil services were hit by a dearth of demand. The number of oil rigs operating outside the US was down by 15 per cent last year. Redundancy and closure costs in the division cost about dollars 20m. The fine china division, whose brands include Royal Doulton and Royal Crown Derby, also suffered, as customers traded down to cheaper items. Operating profits fell from pounds 17.5m to pounds 10.7m.
Investment banking, comprising 50 per cent of Lazard Brothers in London and 10 per cent stakes in Lazard Freres in Paris and New York, dipped from pounds 26.1m to pounds 23.7m.
The best performance came from book publishing, which improved from pounds 59.7m to pounds 80.4m, boosted by two Stephen King bestsellers and Terry McMillan's Waiting To Exhale.
Newspapers improved from pounds 29.7m to pounds 31.1m, with the FT's contribution up from pounds 17.7m to pounds 18.5m. However, Westminster Press collapsed from pounds 6.4m to pounds 1.2m, hit by redundancy costs and start-up expenses of Yorkshire on Sunday. Entertainment, which includes Madame Tussaud's and Alton Towers, increased profits from pounds 12.7m to pounds 15.4m.
Lord Blakenham said operating profits at BSkyB were now well over pounds 1m a week and he expected it to be cash-positive in 1993/4. Pearson has a total exposure to the satellite broadcaster of pounds 303m in equity and loan guarantees. It expects to complete its pounds 21m purchase of BSkyB shares and loanstock from Reed International this Friday.
He described the 15 per cent stake in Yorkshire TV as 'a long-term hold', dampening speculation that neighbouring Granada Group might buy it. He said Pearson would be on the look-out for acquisitions in the media and entertainment sectors over the next 18 months.
(Photograph omitted)
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