British publisher Pearson issues profits warning

30th October 2013, Comments 0 comments

British publisher Pearson, owner of the Financial Times newspaper, warned on Wednesday that it expects group operating profit in 2013 to be lower than last year.

Pearson shares fell almost 4.0 percent in response, topping the losers board on London's benchmark FTSE 100 index.

Pearson, which had previously expected an operating profit this year similar to the outcome last year, said the lower outlook reflected charges related to the merger of its Penguin book publishing division with rival Random House.

It added that operating profit, or earnings before tax and one-off costs, would be impacted also by weak market conditions for college textbooks in its main market in North America.

"Market conditions remain strong in digital, services and emerging markets, but are more challenging in some of our largest textbook publishing markets," chief executive John Fallon said in a company statement.

Pearson however noted that group sales rose 4.0 percent in the first nine months of 2013.

Fallon has succeeded Marjorie Scardino, who stepped down as chief executive at the end of 2012 after 16 years in the top job.

Just a couple of months before she left, Pearson announced that its Penguin division had agreed to merge with Random House to create a leading publisher of English-language books.

Pearson and Random's parent, the German media giant Bertelsmann, agreed to form the joint venture Penguin Random House to cut costs in the face of fast-rising ebook publishing.

Pearson is meanwhile spending about £150 million ($241 million, 175 million euros) in restructuring costs during 2013.

It added on Wednesday that this year, "adjusted operating profit before restructuring charges (are) expected to be lower than in 2012 due to the accounting impact of the Penguin Random House transaction and weak market conditions for college textbooks in North American Education".

In morning trade, Pearson's share price slid 3.74 percent to 1,314 pence on the FTSE, which was 0.64-percent higher overall at 6,817.31 points.

© 2013 AFP

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