Pearson slumps on profit warning

MORE than £1.5bn was knocked off Pearson’s value after a profits warning sent shares in the education giant tumbling.

The company, which owns UK exam board Edexcel, warned that conditions in core markets were ‘yet to improve’.

It downgraded profit expectations by up to 12.5pc, blaming a multitude of factors including currency movements and its sale of the Financial Times newspaper.

But the core problem was a poor US market, with a disappointing number of school-leavers going to university, and a slowdown in the number of adults enrolling in courses. ‘We’re gaining share in each of our major markets, but each is weaker than at the start of the year,’ chief executive, John Fallon, said. ‘It’s frustrating, but will turn.’

The company previously said it expected conditions to improve this year.

Shares fell 16pc, closing 189.5p lower at 998.5p.

Analyst Ian Whittaker at Liberum said that ‘several profit warnings over the past few years’ had yet to take their full toll on the shares, and said he expected them to carry on falling.

‘The market believes the problems are temporary… but Pearson’s problems are more structural in nature,’ he said.

The company sold the FT to Japanese group Nikkei for £844m this year and announced its intention to sell its 50pc stake in the Economist. It is expected to divest its portion of publisher Penguin-Random House within the next two years.

Fallon has argued that the company should be wholly focused on the education business.