Pearson hurt by woes in US arm

Pearson said it had faced “tough market conditions throughout 2013”, with education publishing in the US and UK – its two largest markets – the hardest hit.

It said it saw good profit growth for its flagship FT newspaper as online subscriptions offset ongoing declines in print advertising and circulation, but this was overshadowed by the woes in its US arm.

The FTSE 100 firm, which makes around 60 per cent of annual sales from the US, saw shares drop 8 per cent as it said underlying annual earnings excluding restructuring costs were now expected to fall to about £865m.

This is 5 per cent lower than a year earlier and below market forecasts for around £900m.

Higher net restructuring costs of £130m will push 2013 earnings down further to around £735m.

Pearson chief executive John Fallon said: “Our trading and financial performance has been weaker than expected, particularly in North America.

“With trading conditions still challenging in 2014, this further underlines the importance of the work we started in 2013 to reduce our established cost base and redirect our investment towards our biggest future growth opportunities.”

Mr Fallon, who succeeded Marjorie Scardino in January 2013, unveiled an overhaul last year to reorganise the group into three divisions and reduce its education business across some regions.