Higher-than-expected restructuring costs are weighing on media group Pearson (PSON) which slips 7.9% to £11.95 after the firm again warns that operating profits will miss expectations.

The company is in the midst of a £150 million restructuring plan as chief executive officer John Fallon re-angles the company as a digital business, whether that be selling electronic learning aides to schools or reshaping the Financial Times as an online business.



‘Pearson's pre-close this morning has come in a little weaker than we had expected,’ says Numis analyst Gareth Davies.  ‘Management are guiding to operating profit after restructuring of £735m, a little under our £765m, dropping through to an EPS of 70p which compares to our 74.4p.’

At the same time as restructuring the business the company’s core US education end markets are not making matters easy to sell digital learning aides into schools. Budgets are tight so convincing learning institutions to make the upfront investment required to move to digital is even more difficult than getting them to refresh their textbooks, and weakness in this area was the reason the company last downgraded its operating profit in October.

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Issue Date: 23 Jan 2014