Pearson to axe 3,000 more jobs as its profit struggle continues

PEARSON will slash another 3,000 jobs – nearly a tenth of its global workforce – in the company’s latest round of restructuring as John Fallon, the embattled chief executive, attempts to restore its crumbling education publishing empire.

The cuts come on top of 4,000 earlier job losses and are part of a plan to strip out £300m in costs to shore up profits that are under serious pressure from changes in the education market.

Mr Fallon has issued a string of profit warnings in recent years as Pearson’s core higher education business has been hit by lower student numbers and the growth of textbook rentals.

Its half-year results were in line with expectations yesterday, and investors were braced for a sharp cut in the dividend from what had been one of the City’s most reliable payers. Pearson slashed its interim dividend from 18p to 5p. The FTSE 100 education publisher has said it will the 3,000 jobs will go as part of its restructuring efforts following its worst year in nearly half a century on the stock exchange.

The company, which recently sold nearly half its 47pc stake in the consumer publisher Penguin Random House to buttress its balance sheet, said underlying revenues had grown 1pc to £2bn, from £1.9bn in the same period of last year. However, the company made an overall first-half loss before tax of £10m, compared to a loss of £306m last year, as costs at the firm came down.

Mr Fallon said Pearson had seen a “solid” first half and reassured investors who have grown weary that its forecasts were unchanged.

He added: “We are making good progress on our strategic priorities and our guidance for 2017 remains unchanged. We are focused on maximising performance through the critical second half.”

Pearson’s sales are heavily biased to the second half of the year when students buy material for the new school and college year. George Salmon of the stockbroker Hargreaves Lansdown said of the update: “More recent indications have implied the challenging conditions in the US are at least stabilising, and these savings would certainly boost the upside.

“Nonetheless much work still needs to be done, and investors should remember that the group is already on plan B. The last thing we’d want to see is the emergence of a plan C.”

The company’s shares closed down 2pc at 655.5p.