Pearson sees cost cuts bearing fruit as digital push advances

Education publisher Pearson said on Wednesday it expects higher savings from cost cuts as it goes through a major restructuring to focus on and ramp up digital content.

The FTSE 100 company, which has cut thousands of jobs and sold assets, including the Financial Times, has been expanding into new areas such as providing online academic programmes and supporting virtual schools that are used by home-schooled pupils or those who want to learn subjects not taught at schools.

The British company now expects annual cost savings to be higher than £330 million (€372.5m) by the end of 2019. It had previously forecast cutting about £300 million in costs every year between 2017 and 2020.

However, the company expects one-off restructuring costs to rise to around £330 million, ahead of its original plan of £300 million.

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"We have made good progress in 2018, returning Pearson to underlying profit growth...There is much still to do," chief executive John Fallon said.

The company had previously forecast that it would return to profit growth on an underlying basis in 2018.

Pearson said it expected to post adjusted operating profit of £540 million to £545 million for 2018, well above analysts’ average consensus of £536 million, according to compiled consensus.

It also forecast higher adjusted operating profit of £590 million to £640 million for 2019, also above a consensus of £601 million. – Reuters