Fri, Jan 22, 2016 - Page 15 News List

Pearson to lay off 4,000 employees as earnings falter

Bloomberg

Pearson PLC said it plans to cut about 4,000 jobs and forecast that earnings would miss analysts’ estimates as the UK education company struggles with slowing demand for textbooks and dwindling college enrollments.

The cuts are equivalent to 10 percent of the workforce and a majority will be completed by the middle of the year, the London-based company said yesterday.

Earnings, excluding some items, are expected to drop to between £0.50 to £0.55 a share this year, Pearson said, the second time in three months that its forecast has disappointed investors.

The company, which now focuses on education after selling the Financial Times newspaper and a stake in The Economist magazine last summer, plans to spend £320 million (US$454 million) this year to cut costs and fuel growth in its largest markets, most notably the US.

Pearson has only just emerged from a previous reorganization that began in 2013 and also included thousands of job cuts.

“Our competitive performance during the last three years has been strong, but the cyclical and policy related challenges in our biggest markets have been more pronounced and persisted for longer than anticipated,” chief executive officer John Fallon said in a statement.

Pearson shares have plunged 49 percent in the past year, giving the company a market value of £5.4 billion. On Oct. 21 last year, the stock had its biggest drop since 1988 after the company cut its profit forecast.

As a result of the latest restructuring, Pearson said it expects savings of about £350 million a year. Following the move, along with a stabilization of markets in the US and the UK, Pearson forecasts adjusted operating profit at or above £800 million in 2018.

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