Media

Pearson expects profit to fall next year


Pearson said its chief financial officer is to leave the company and it expects profits to fall next year, sending shares sharply lower in early trading.

Coram Williams’ decision to step down comes one month after chief executive John Fallon announced he would end his challenging seven-year tenure as head of the group that has warned on profits six times in the past seven years.

Mr Williams, who was seen by some insiders as a potential contender for the top post, will be replaced by his deputy Sally Johnson, as he moves on to a “comparable role at a company based in continental Europe”.

Confidence in Pearson has been knocked several times as the company moves through a painful transition to digital products and services. Since he took over in 2013, Mr Fallon has gradually sold assets such as Penguin, the Financial Times and its stake in The Economist, transforming the media conglomerate into a slimmer company solely focused on education services.

In December, the company announced it had agreed to sell its remaining stake in Penguin Random House to Bertelsmann for £530m. It said on Thursday the deal would help it achieve adjusted operating profits in the range of £500m to £580m in 2020.

Pearson said its 2019 full-year results, out in February, would show adjusted operating profit for the full year to be at the bottom of its previously guided range of £590m to £640m. Sales in its US university business, which makes up roughly a quarter of revenues, were down by 12 per cent in the year.

“We have secured flat revenue this year and delivered operating profit within the guidance range, with much weaker sales in US Higher Education Courseware offset by a strong performance in the broader 76 per cent of Pearson,” Mr Fallon said.

“The appointment of Sally is the result of Coram’s successful efforts to build a strong finance function while helping to lead the group’s overall transformation, transition to digital and path to a strong financial position,” Mr Fallon said.

Pearson’s share price, which has fallen more than 40 per cent over the past four years, was down 13 per cent in early morning trading.



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