Pearson slashes interim dividend by 72%, to cut 3,000 jobs

Education publisher Pearson said on Friday that it was slashing its interim dividend by 72% as it kicked off a restructuring programme that will involve cutting 3,000 jobs.

Underlying sales edged up to £2bn from £1.9bn, mostly due to higher gross sales and lower returns in North American higher education courseware, modest growth in VUE, continued strong growth of Pearson Test of English in Australia, good growth in Wall Street English and English language courseware in China and in school courseware in South Africa. This was partially offset by expected declines in US school assessment, macroeconomic weakness in Brazil and the impact of business exits in the Middle East.

Meanwhile, adjusted operating profit came in at £107m from £15m in the first half of 2016, reflecting savings from the 2016 restructuring programme, a benefit from phasing and the strength of the US dollar versus the pound, offset by cost inflation and other operational factors.

Pearson said its pre-tax loss in the period narrowed from £306m in the first half of last year to £10m, as it cut its dividend per share to 5p from 18p and announced plans to reduce its employee headcount by approximately 3,000 full time equivalent employees.

Chief executive John Fallon said: "Pearson has had a solid first half. We are making good progress on our strategic priorities and our guidance for 2017 remains unchanged. We are focused on maximising performance through the critical second half.

"Strong cash generation, prudent management of our balance sheet and implementation of our transformation plans are positioning us to be the winner in digital education, and create long-term sustainable value for our shareholders."

The company said it expects full-year adjusted operating profit of between £546m and £606m and adjusted earnings per share between 45.5p and 52.5p after an interest charge of £74m and a tax rate of approximately 21%, all based on exchange rates on 31 December 2016.