UK publisher Pearson axes 4,000 jobs

21st January 2016, Comments 0 comments

British education publisher Pearson on Thursday unveiled plans to axe 4,000 jobs, or 10 percent of its workforce, in an effort to combat weak demand.

London-listed Pearson, which last year sold the Financial Times daily business newspaper and a 50-percent stake in The Economist Group to focus on education, announced the radical restructuring in a trading update that sent its share price soaring.

"We have undertaken a rigorous, bottom-up review of our markets, our operations and our financial plans," it said in a statement.

"As a result, we are taking further action to simplify our business, reduce our costs and position ourselves for growth in our major markets."

The firm hopes to implement the "majority" of the 4,000 job cutbacks by the middle of this year, completing the cull by the end of 2017.

The overhaul sent Pearson shares spiking 17.41 percent to close at 772 pence, topping the leaderboard on London's FTSE 100 index, which rose 1.77 percent to finish at 5,773.79 points.

Pearson also slashed its full-year earnings forecast again, after a similar downgrade in October.

The publisher -- which will post official annual results on February 26 -- expects underlying operating profits of about £720 million ($1.02 billion, 934 million euros) in 2015.

And it warned that profits were set to slide further in 2016, to between £580 million and £620 million, before restructuring costs.

Pearson added it would take a £320-million hit this year from costs linked to the overhaul, but the group expects to generate annualised savings of approximately £350 million.

The group blamed a slowdown in demand for Thursday's announcements.

Pearson has been hit hard by a difficult education market in the United States, where fewer people are going to university, instead seeking to go straight into employment in a buoyant jobs market.

It has also been impacted in the UK as high costs have seen fewer students take vocational courses.

"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," said chief executive John Fallon.

"Faced with these challenges, we are today announcing decisive plans to further integrate the business and reduce the cost base, rationalise our product development and focus on fewer, bigger opportunities."

Last July, the publishing giant sold the Financial Times to Japanese media group Nikkei for £844 million, saying it wanted to focus solely on the education publishing sector which accounts for most of its business.

And in August, Pearson offloaded its 50-percent stake in The Economist Group, owner of prestigious magazine The Economist.

The holding was sold for £469 million, split between The Economist Group itself and Italian investment firm Exor.

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© 2016 AFP

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