Pearson plunges as it warns of lower profits
FTSE 100-listed publishing group Pearson saw its shares slide almost four per cent yesterday, after it warned that full-year operating profits will be lower than last year.
The education and media group, which owns the Financial Times newspaper, attributed the lower profit forecast to weak market
conditions for college textbooks in North America and the accounting impact of the merger of its Penguin books division with Random House.
The merger was agreed last year but only finalised this July due to delays in regulatory approval.
However, Pearson reiterated its full-year adjusted earnings per share guidance, which is expected to be broadly level with 2012.
Sales rose two per cent over the first nine months of the year, attributed to growth in its emerging markets and professional education divisions.
The company said that its restructuring programme, designed to increase its focus on emerging markets and digital services, is on track. Restructuring charges are expected to hit £150m in 2013, or £100m after cost savings achieved during the year.
“Market conditions remain strong in digital, services and emerging markets, but are more challenging in some of our largest textbook publishing markets,” said chief executive John Fallon, who took over the role from longstanding boss Marjorie Scardino at the beginning of the year.
“This reinforces the importance of our strategy of accelerated change, so that we can shift more capital and talent more quickly towards these significant growth opportunities. The pace of this restructuring is increasing through the second half of this year and will continue into the first half of 2014.”
Sales in the FT Group were broadly flat for the first nine months.
Across print and online, the FT reached its highest circulation in its 125-year history at nearly 629,000, boosted by a 24 per cent rise in digital subscriptions.
The possible sale of its M&A news service Mergermarket is “progressing well”, Pearson said.
Shares closed down 3.6 per cent yesterday.