Pearson to cut 4,000 jobs in latest restructuring plan

Thu Jan 21, 2016 11:12am EST
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By Paul Sandle and Kate Holton

LONDON (Reuters) - Britain's Pearson said it would cut 10 percent of its workforce and restructure once again to tackle the unrelenting pressures hitting markets from North America to South Africa after it decided to focus on educational publishing.

Shares in the former owner of the Financial Times, down more than half since last March, jumped more than 16 percent after it pledged to maintain its dividend, despite forecasting sharp profit falls in 2015 and 2016 before a recovery in 2018.

Chief Executive John Fallon said problems in its markets, such as fewer people in the United States going to college, had been more pronounced and had lasted longer than expected.

"We are taking immediate and decisive action to simplify the company, integrate operations and cut costs, all with the aim of getting Pearson growing again," he told reporters on Thursday, setting out plans for 4,000 job cuts.

The plan could be the last throw of the dice for Fallon, who has issued a series of profit warnings since he took over in 2013, in contrast to the steady growth delivered by his predecessor Marjorie Scardino during her 16 years in charge.

One of Fallon's first moves was reshaping Pearson to try to make it better placed to sell products digitally, which he said at the time would result in an improvement in growth in 2015.

Instead, market problems described as cyclical have stubbornly persisted, and the company has forecast earnings this year of 580 million to 620 million pounds, up to 100 million pounds below market estimates.

Fallon's response is another dose of the same medicine, along with a prognosis of market recovery in another couple of years.   Continued...