Tough US environment for Education and asset disposals

Pearson's H1 15 results showed revenues up 1% organically to £2.2bn (before a 4% forex positive impact) and adjusted operating profit down 4% to £72m. This is nonetheless rather meaningful as H1 is only a small part of the FY results (c.60% of sales and c.90% of profits generated in H2). The dividend is raised by 6% to 18p and management reiterated its previous FY15e guidance for adjusted EPS of 75p to 80p, assuming exchange rates at last 21 January's levels (2014 average £:$ rate was 1.65; as a reminder, a 5% move in the average £:$ exchange rate for the full year has an impact of approximately 1.2p on adjusted EPS) and no change in the portfolio. Note that the disposal of PowerSchool, sold to Vista Equity Partners for $350m in mid-June 2015, will reduce EPS by 1p and that, if current rates persist until end-2015, it would have a -2p impact. But largely overshadowing these results, was the announcement of Pearson's intention to sell the FT Group to Nikkei Inc. for a gross consideration of £844m cash (above Axel Springer's £750m offer), followed by the confirmation of also being in discussions over the potential sale of its 50% stake in The Economist (further announcements due; not done yet). This had been around for some time, namely since the departure of previous CEO Marjorie Scardino in early 2013, and definitely focuses the group on global Education.