Pearson sees 2013 flat, begins restructuring plan

LONDON (Reuters) - British education and media group Pearson PSON.L said it expects this year's earnings to be flat on 2012 and that it will start a 150 million pound restructuring plan to help reposition its education business.

Penguin books are seen in a used bookshop in central London October 29, 2012. REUTERS/Stefan Wermuth

The owner of the Financial Times newspaper and Penguin books publisher on Monday said full-year adjusted earnings per share fell 3 percent to 84.2 pence, in line with the 84 pence level the company estimated in January.

Warning that it expected tough trading conditions to continue this year, the group’s new chief executive John Fallon, who took over from long-serving Majorie Scardino in January, announced a restructuring plan which aims to deliver faster growth from 2015.

“The restructuring of the company ... is designed to strengthen dramatically Pearson’s position in digital education services and in our most important markets for the future,” Fallon said.

Pearson said that the restructuring programme is expected to generate around 100 million pounds of annual cost savings from 2014 and it planned to reinvest that sum to grow its digital and emerging markets business and spend it on further restructuring.

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The group issued a rare downgrade to forecasts in January as sluggish advertising and weaker educational funding in developed markets bit into profits.

The weakening conditions come at a time of widespread change for Pearson - for years one of the most stable media groups in Britain.

Not only does the group have a new boss but at the same time, it is merging its Penguin book publisher with Random House, owned by Germany’s Bertelsmann, and it faces constant media speculation as to whether it will sell its FT Group under the new CEO, who has few ties to the newspaper industry.

Liberum analyst Ian Whittaker said that Pearson’s restructuring and its plan to reinvest the cost savings meant that he did not see earnings per share growth returning until 2015.

“No return of cash either,” he said, reiterating his “sell” rating on the stock.

Reporting by Sarah Young; editing by Rhys Jones