Pearson cut its full-year earnings guidance, pencilling in around £720m in underlying operating profits for 2015, and warned earnings were set to fall further in 2016, to between £580m and £620m before restructuring costs.
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Pearson chief executive John Fallon.
Pearson, the former owner of the Financial Times, is cutting 4,000 jobs – around 10 per cent of its workforce, and restructuring again after forecasting weak earnings for this year and next.
“We are moving quickly to implement this restructuring and are planning to complete the majority of it by the half year, and all of it by the end of the year”, it said in a statement. Pearson employs 5,000 staff in the United Kingdom, meaning that approximately 500 roles could be lost in the country.
The company has two offices in London and further sites at Manchester, Oxford and Harlow.
A spokesman for Pearson said: “The UK is our home market and our second biggest market globally”. It hopes its turnaround efforts will cut annual costs by around £350m and return annual operating profits to at least £800m by 2018.
Pearson has simplified its portfolio amid a challenging environment with several measures – including a merger of Penguin with Random House to create a strong trade publisher, and exiting the market of financial news and information through the sale of the Financial Times Group, Mergermarket and its stake in the Economist group. The stock had plunged 49 percent in the past year through Wednesday, and on October 21 had its biggest drop since 1988 after the company cut its profit forecast. The company also plans to reduce exposure to large-scale direct delivery services to focus more on its “scalable” online and virtual services, along with exiting loss-making businesses.
Pearson also has introduced new technology products that are marketed to its institutional customers as they transform their ways of teaching and communicating with students, including online-based learning software and school certification tools.
The restructure, which begins this year, will see the group refocus on fewer, bigger opportunities and cost £320 million.
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The holding was sold for £469 million, split between The Economist Group itself and Italian investment firm Exor.
