Pearson shares fell by over 10 percent on Monday morning, after reporting a worse-than-expected fall in sales amidst a challenging market.
The educational publisher reported disappointing sales numbers, with underlying sales falling by 7 percent in the first nine months of the financial year and 9 percent in North America. This contrasts initial projections by analysts who had only expected a fall in sales of around 5 percent. Today’s fall in shares for the company marked the biggest fall in the FTSE 100.
However, Pearson are expected to meet its profit targets for 2016 due to various cost-saving precautionary measures. Sales had improved in September and October which, coupled with cost reduction efforts, have enabled the company to achieve its expected profit forecast of between £580 million to £620 million this year.
Pearson reported that the required cutting of 9000 jobs, announced in January, is 90 percent complete. The move is expected to have saved the company around £350 million annually.
“While market conditions continue to be challenging, particularly in higher education, thanks to tight cost management we are on track to deliver our guidance this year and to achieve our long-term growth goal,” commented John Fallon, chief executive of Pearson.
Moreover, the company noted that the weakening of the pound in recent months had proven a boost for profits. The company also indicated that if sterling continued to remain weak for the remainder of the year, this would increase the earnings-per-share guidance range by around 4.5p to 59.5p.
