Pearson predicts flat earnings in 2013

Monday 25 February 2013 20.49
FT owner Pearson to start £150m sterling restructuring plan
FT owner Pearson to start £150m sterling restructuring plan

British education and media group Pearson said it expects this year's earnings to be flat on 2012.

The company also said it will start a £150m sterling restructuring plan to help reposition its education business.

The owner of the Financial Times newspaper and Penguin books publisher said full-year adjusted earnings per share fell 3% to 84.2 pence.

This was in line with the 84 pence level the company estimated in January.

Warning that it expected tough trading conditions to continue this year, the group's new chief executive John Fallon, who took over from long-serving Majorie Scardino in January, announced a restructuring plan which aims to deliver faster growth from 2015.

"The restructuring of the company ... is designed to strengthen dramatically Pearson's position in digital education services and in our most important markets for the future," Fallon said.

Pearson said that the restructuring programme is expected to generate around £100m of annual cost savings from 2014 and it planned to reinvest that sum to grow its digital and emerging markets business and spend it on further restructuring.

The group issued a rare downgrade to forecasts in January as sluggish advertising and weaker educational funding in developed markets bit into profits.

The weakening conditions come at a time of widespread change for Pearson - for years one of the most stable media groups in Britain.

Not only does the group have a new boss but at the same time, it is merging its Penguin book publisher with Random House, owned by Germany's Bertelsmann, and it faces constant media speculation as to whether it will sell its FT Group under the new CEO, who has few ties to the newspaper industry.

Analysts said that Pearson's restructuring and its plan to reinvest the cost savings meant that he did not see earnings per share growth returning until 2015.