Pearson plummets 9pc as figures fail to impress

EDUCATION and media company Pearson was the biggest blue-chip faller as its latest figures disappointed.

While the firm said it was trading in line with expectations it set out in February, it seems the market was expecting more.

Sales were 7pc lower in the first half than a year ago at £1.86bn and profits plunged £39m to just £15m in the period.

However, the firm’s net debt did fall to £1.42bn from £2.23bn a year ago. It has also reduced the headcount at the firm by 3,450.

Pearson is on a programme of simplification, having sold noncore assets such as the Financial Times and Economist publications to focus on interactive educational media. Some experts are concerned at this decision because there is an intense amount of competition from online content which is often free.

While the firm expects all of its changes to save around £350m in the end, the restructuring will cost it £320m this year. The group has held its dividend at 18p a share – which should be covered but only if it meets earnings forecasts.

George Salmon, equity analyst at Hargreaves Lansdown, said: ‘Disposals have shored up the firm’s balance sheet but the company still faces a threat from the volumes of free educational content that can be found online.

‘With a turnaround far from guaranteed, investors should not be counting any chickens just yet.’

Shares slipped by 9.1pc, or 88p, to 882p.

Financial firms accounted for many of the greatest risers on the market as the FTSE 100 index nudged up 3.37 points to 6724.43.

Barclays climbed 5.5pc, or 8.05p, to 154.5p on a confident update which promised any Brexit related slowdown would be short-lived.

Standard Life gained 3.7pc, or 10.7p, to 302.9p and Schroders surged 3.4pc, or 87p, to 2618p.

Buy-to-let lender Paragon picked up as it announced pre-profit had grown 9pc to £106.3m since October 1. It said loans were performing well, with £989.6m lent over the first nine months of the year, some 21.2pc higher than the same period a year before.

It said lending had slowed in the third quarter as the combination of stamp duty changes and uncertainty in the run-up to the referendum took hold.

Paragon said there is the potential for more disruption to the market but it is too early for the scale of it to be determined.

It said any disruption brought opportunities for specialists to gain market share. Meanwhile, the firm has also been growing its car finance business, lending £61.5m over the nine months to June 30. Shares climbed 2.7pc, or 7.1p, to 273.7p on the upbeat update.

There was good news elsewhere in the property market too. While investors have been worrying about property funds being forced into a fire-sale of their assets, Custodian

Real Estate trust revealed it had sold one of its properties for more than expected.

The firm sold a hotel on a business park in Dudley, West Midlands for £4.45m, some £340,000 more than it was valued at in March. The trust made an 8.3pc gain on the property, which is let to Premier Inn Hotels until 2038. Custodian will use the proceeds to fund acquisitions. Shares advanced 0.5pc, or 0.5p, to 107.5p.

Essentra was the greatest faller on the All Share after admitting a challenging first half to the year. The plastic products maker said like-for-like revenue was down 7pc to £545m in the six months to June 30. Net debt rose to £434m and operating profit fell 18pc to £70m.

The firm said operational challenges, most notably in its filter products and health and personal care business, along with a weak pound affected results. But it said the issues were temporary and it is confident of delivering a stronger result in the second half.

The market didn’t share Essentra’s optimism and shares plunged 22.6pc, or 141.5p, to 485p.