Pearson To Cut 4,000 Jobs As Part Of Restructuring Program; Issues New Profit Warning

Pearson, the world’s biggest education publisher, announced Thursday that it would cut 4,000 jobs, after issuing its second profit warning in three months. The company said in a statement that the job cuts would be completed by this year and added that the profits for next year could be lower.

The jobs to be eliminated account for 10 percent of the company’s workforce worldwide. Pearson said it was affected by falling college enrollments in the U.S. and the changes made to the education policy in the U.K. The London-based company also said that it would incur a cost of about 320 million pounds ($453 million) due to the restructuring. The company said it expects the operating profit for 2018 to be at or more than 800 million pounds ($1.13 billion), based on the recovery of its business in the U.S. and the U.K, and is now trying to enhance its presence in emerging markets like China and Brazil, to cater to the demand for learning services in the region.

"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,” John Fallon, Pearson’s chief executive officer said in the statement, adding: “Faced with these challenges, we are today announcing decisive plans to further integrate the business and reduce the cost base, rationalize our product development and focus on fewer, bigger opportunities.”

Pearson has simplified its portfolio amid a challenging environment with several measures — including a merger of Penguin with Random House to create a strong trade publisher, and exiting the market of financial news and information through the sale of the Financial Times Group, Mergermarket and its stake in the Economist group. The company also sold PowerSchool and Fronter, along with several print textbook lists.

“The Board believes that the restructuring that we’re announcing today will help build on these strengths and position Pearson to take advantage of its market opportunities, enjoying sustained growth,” Sidney Taurel, Pearson’s chairman, said in the statement.

The latest restructuring will include merging its businesses producing courseware for teachers as well as integrating its assessment centers in North America. The company also plans to reduce exposure to large-scale direct delivery services to focus more on its “scalable” online and virtual services, along with exiting loss-making businesses. Along with strategic changes, Pearson announced changes to the company’s leadership team.

“We are broadly encouraged that Pearson has decided to redouble its efforts to meet external and internal challenges,” Roddy Davidson, an analyst for Shore Capital, said, according to Wall Street Journal.

Following Thursday’s announcement, Pearson’s shares rose over 15 percent on the London Stock Exchange.