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Pearson says profits on track but FT ad revenues down

LONDON - Financial Times owner Pearson said it remains on track to make earnings growth this year, but said advertising was still in sharp decline and admitted the outlook remained uncertain.

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Pearson said that advertising revenues across its business newspapers continue to be erratic. At the Financial Times, advertising has continued to decline year on year, despite modest growth in September and good growth in the US.

It expects the FT's total advertising revenues to be some 12% lower in the second half and approximately 15% lower for the full year, after an 18% decline in the first half.

"We have reduced the FT's cost base by approximately £15m this year, around half of which has been reinvested in the newspaper. Since 2000, the FT has reduced costs by approximately £100m," Pearson said in a statement.

The news pushed Pearson shares lower this morning falling 3.15% or 19.75p to 605.7p.

There was light at the end of the tunnel with improvement evident in certain advertising sectors, including recruitment, corporate results and transactions, and online, which are showing signs of stabilisation.

Despite the tough ad market, Pearson said it expects the FT Group to report profits slightly ahead of last year, benefiting from another strong year at Interactive Data Corporation.

At its education business, Pearson said its school and higher education businesses will report good underlying progress on revenues and profits, but its professional division will be significantly lower than last year and below current expectations.

Revenues in its government solutions business will, it said, show good growth as Pearson benefits from major contracts with the US departments of health and of justice, which began this year.

Looking towards 2004, Pearson said it was confident that it will make progress on earnings, cash and returns next year.

The company said: "Although the outlook for advertising remains uncertain, we expect a significant profit improvement as our business newspapers benefit from continuing cost reductions. We also expect further growth at IDC."

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