Pearson PLC made good on a pledge to cut costs, slashing 3,000 jobs and cutting its interim dividend to preserve cash as it works on a turnaround of its struggling education business.
The staff cuts, about a 10th of the company’s total work force, are to have “a particular focus” on managerial positions, and office locations are to also be reduced, Pearson said yesterday.
It lowered its interim dividend by 72 percent to ￡0.05 a share, a move signaled last month.
The staff reductions are part of chief executive officer John Fallon’s plan to cut annual costs by ￡300 million (US$394.4 million) by 2019, as he tries to create a leaner company more focused on digital education.
Fallon has had to accelerate savings initiatives as the business faces challenges in the US, where college enrollment has fallen and online learning and rentals are putting pressure on textbook sales.
He said he has cut 10,000 jobs since 2013.
“As you move from being a largely analog, print-led company to a primarily digital-driven company that’s the sort of cost savings and changes in the company you should expect,” Fallon said on a telephone call with reporters. “It is fundamental to the long-term future of the company.”
The company reported a first-half operating profit of ￡16 million after a loss of ￡286 million a year earlier, and reiterated its full-year forecasts.
The cost-savings campaign is the latest in London-based Pearson’s efforts to revive earnings amid a transforming education market.
The company last year announced 4,000 job cuts and also reduced thousands of jobs in 2013 and 2014.
“No one takes pleasure in this sort of transformation that we’ve had to do,” Fallon said.
Last month, Pearson said it was selling a 22 percent stake in book publisher Penguin Random House to majority owner Bertelsmann SE for about US$1 billion to help bolster its balance sheet. The company sold the Financial Times and its stake in The Economist in 2015 to invest in its education business.
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