21st Jan 2016 07:22
LONDON (Alliance News) - Education publisher Pearson PLC Thursday trimmed its guidance for calendar 2015 and outlined plans to further simplify its business, which will hit its operating profit in 2016.
The company now expects to report adjusted earnings per share of between 69 and 70 pence for 2015, down from its previous guidance of the lower end of a range of 70p to 75p.
Pearson also outlined guidance for 2016, saying it expects to report adjusted earnings per share before restructuring costs of between GBP580 million and GBP620 million, down from the approximately GBP720 million it is now guiding for 2015, and earnings per share of between 50 and 55 pence.
The company cited a loss of operating profits from the high-profile sales it made in 2015, including of the Financial Times Group and of its stake in The Economist, ongoing challenging conditions in its largest markets, and the reinstatement of its employee incentive pool, as well as other operational factors.
Pearson will take "further action" to simplify its business and cut its costs, the majority of which it expects to complete by mid-year, for a one-off cost of around GBP320 million in 2016. It expects these actions to produce savings of around GBP350 million on an annual basis, with around GBP250 million to be made in 2016 and a further GBP100 million in 2017.
Including these restructuring charges, Pearson expects its 2016 operating profit to be between GBP260 million and GBP300 million.
Despite the weaker short-term outlook, the education media company said it expects its restructuring programme, along with the launch of new products, and stability returning to US college enrolments and the UK qualifications market, to help drive its adjusted operating profit to at or above GBP800 million in 2018.
Additionally, Pearson said it expects to propose a total dividend for 2015 of 52 pence per share, up from the 51p it paid in 2014. It plans to sustain its dividend at this level whilst it rebuilds cover.
"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 in a statement.
"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," Fallon added.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Pearson