Pearson shares plunges as it warns on profits

Shares in Pearson plunged more than 20 per cent in morning trading after the education publisher warned on profits and said it was planning to sell its publishing unit Penguin Random House.
By The Newsroom
Published 18th Jan 2017, 08:58 BST
Updated 18th Jan 2017, 09:01 BST
Penguin books. Photo credit: Tim Ireland/PA WirePenguin books. Photo credit: Tim Ireland/PA Wire
Penguin books. Photo credit: Tim Ireland/PA Wire

The former owner of the Financial Times said underlying profitability is around £180m lower than previously expected following an “unprecedented” decline in North American operations.

It expects operating profit in 2017 of between £570m and £630m.

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The group added that it intends to issue an exit notice regarding its 47 per cent stake in Penguin Random House to its joint venture partner Bertelsmann, with a view to “selling our stake or recapitalising the business and extracting a dividend”.

Pearson’s shares took a hammering as result, falling 24 per cent to 614.5p.

Chief executive John Fallon said: “The education sector is going through an unprecedented period of change and volatility. We have already taken significant steps on restructuring, reducing our cost base by £375m last year.

“However our higher education business declined further and faster than expected in 2016. So we are taking more radical action to accelerate our shift to digital models, and to keep reshaping our business.”