Media giant Pearson is axing a raft of jobs as part of a major new
reorganisation at the Penguin books-to-Financial Times owner.
The firm, which makes the bulk of its earnings selling educational
products such as manuals and tests, warned it would spend pounds sterling 200m
refocusing the business for the digital age by 2015.
The shake-up comes just eight weeks after John Fallon took over as chief
executive from long-serving Dame Majorie Scardino. He refused to disclose the
scale of the impending job cuts.
Pearson said the restructuring programme is expected to generate pounds
sterling 100m of annual cost savings from 2014 and it planned to reinvest that
sum to grow its digital arm and business in the emerging markets.
Fallon said: "We are ... planning significantly to accelerate our push
into digital learning, education services and emerging markets. For some time
we have been focusing our acquisition and organic investment in these areas.
We now intend a further significant reallocation of internal resources to
these activities."
But the firm was the biggest faller of the Footise, down 3.7pc, following
a gloomy outlook for 2013, and pre-tax profits falling 59pc.
Pearson had already issued a rare downgrade to forecasts in January due
to sluggish advertising and weaker educational funding in developed markets.
Fallon said: "We expect the external environment to remain challenging
for our developed world and publishing business in 2013 owing to a combination
of cyclical and structural factors."
He listed several concerns including pressures on education budgets and
college enrolments, retail consolidation, the shift in the business model from
print sales to digital subscriptions and changing consumer behaviour. Digital
sales of the Financial Times exceeded the print edition for the first time.
Pearson (down 45p to 1171p) said pre-tax profit had fallen to pounds
sterling 434m from pounds sterling 1,047 largely due to an exceptional gain
the previous year from the sale of a business and a pounds sterling 113m cost
in 2012 due to the closure of another division.
However, it said a more meaningful measure is adjusted operating profit,
which fell to just pounds sterling 936m from pounds sterling 942m on sales of
pounds sterling 6.1bn.
In the UK Pearson said Penguin had its best year ever in terms of
bestsellers. It is merging the business with Random House, owned by
Bertelsmann.
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