Pearson Cutting 4,000 Jobs as First-Half Sales DeclineRodrigo Orihuela and Kristen Schweizer
Pearson Plc, the publisher of the Financial Times, said today it will have cut a total of about 4,000 jobs in the two years through 2014 and reported a sales decline of 6.5 percent for the first half.
The cuts are equivalent to about 10 percent of the global workforce, Chief Executive Officer John Fallon said on a conference call today. About 3,300 of that total were removed in 2013, Pearson said in February. The cuts will be partly offset by the creation of 1,800 jobs in the two-year period as the London-based company expands digital and emerging-market operations.
Pearson is positioning itself as “a global learning services company,” Fallon said in a statement today. “This will drive a leaner, more cash-generative, faster-growing business from 2015.”
First-half revenue dropped to 2.05 billion pounds ($3.5 billion) from 2.19 billion pounds a year earlier, in line with the average of analyst estimates compiled by Bloomberg, as the strength of the pound reduced revenue converted from U.S. dollars and other currencies.
The shares rose as much as 4.5 percent in London, the biggest intraday jump since July last year. The stock was up 2.8 percent at 1,132 pence as of 10:09 a.m., paring the decline to 16 percent this year and giving the company a market value of about 9.3 billion pounds.
Pearson, which gets about 60 percent of its revenue from North America, said it would cut its full-year forecast range for adjusted earnings per share of 62 pence to 67 pence by 1 pence if current exchange rates persist until the end of 2014.
First-half operating profit adjusted for some items fell 45 percent to 75 million pounds.
The company said it will pay a dividend of 17 pence a share, in line with a Bloomberg forecast.
Pearson said in February that it wouldn’t emerge from a difficult transition period until 2015 after earnings plunged on weak demand in U.S. higher education and restructuring costs. The North American education market accounts for about half of the company’s sales.
Pearson, which spent about 176 million pounds reorganizing last year, forecast in January that net restructuring expenses will be about 50 million pounds in 2014 and it will invest about 50 million pounds to expand digital operations and businesses in emerging markets.
The company also said in January that trading conditions would remain challenging this year, with declining college enrollments in North America. Business in the U.K. will also also be hurt by curriculum changes affecting schools.