Pearson: Former FT owner to axe 4,000 jobs as part of £320m restructure

Pearson is set to cut 4,000 jobs to deal with worse-than-expected earnings, the publisher announced on 21 January. The former Financial Times (FT) owner also expects earnings per share to be 69p and 70p, it said in its January trading update.

With earnings lower than expected and Pearson speaking of "ongoing challenging conditions in [its] largest markets", the company hopes the job cuts will help it in the long term. Pearson is expecting its 2016 earnings per share to fall somewhere between 50p and 55p.

The 4,000 jobs at risk are around 10% of the company's workforce and the cuts are part of a restructure that is expected to cost Pearson £320m (€416m, $453m). However, the company said it is expected to save £350m between 2016 and 2017 from the disposal and the termination of other overhead costs.

Chief executive John Fallon explained the need for the restructuring plans, saying: "Our competitive performance during the last three years has been strong, but the cyclical and policy related challenges in our biggest markets have been more pronounced and persisted for longer than anticipated."

The company spent 2015 disposing of assets not related to its education publishing, selling two main publications FT and the Economist. The disposals were welcomed by investors, despite the profitable publications.

Pearson has tried to focus on its core businesses, but a severe downgrade of its shares by Credit Suisse in October caused a major drop in the company's share price.Overall, the publisher lost more than 43% in listed value in 2015.

On 23 July, Pearson announced the surprise sale of the FT to Japanese publishing powerhouse Nikkei. On the same day, the publisher said it was discussing the sale of the salmon-coloured paper to German publisher Axel Springer.

"Pearson will now be 100% focused on our global education strategy," the publisher's management said in a statement.
The sale did not include the FT's headquarters at One Southwark Bridge in London, but FT's secondary publications such as Investors Chronicle, the Banker and MandateWire have been sold to Nikkei.

Less than a month after the FT sale, the Economist Group bought the majority stake in weekly publication the Economist. More than a quarter of shares were sold Italian-based investment company Exor, while the Economist Group itself will buy the rest.

Pearson's share price surged more than 9% after the opening bell following the announcement of the job cuts.