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Pearson in £150mln cost drive as profits slip

Last updated: 04:21 25 Feb 2013 EST, First published: 05:21 25 Feb 2013 EST

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Pearson (LON:PSON) today warned that it expects trading to be tough in 2013, though a sale of the FT is not being considered.

Speculation has grown about the FT’s future since John Fallon took over as Pearson’s new chief executive at the start of the year.

In a conference call today, however, he said: “The business is not for sale, nor have we initiated, conducted, encouraged in any shape or form, any sort of process whatsoever, nor have I had any conversations with anybody about the sale of the FT.”

Profits at the education and publishing group tumbled by 59% to £434mln in 2012 without the one-off gain on the sale of FTSE International in 2011.

Underlying operating profits fell 1% to £936mln, while sales rose 4% to £6.1bn.

US education revenues rose by 2%, though were outstripped by international education revenues, which jumped by 13%.

The FT Group boosted sales by 4% with the paper’s digital subscriptions now exceeding print. Book arm Penguin’s e-book sales now also account for 17% of sales.

The company said it expects tough trading to continue throughout this year and has launched a £150mln cost cutting programme primarily focused on its education arm and separating Penguin ahead of its merger with Random House.

Excluding these costs, Pearson expects to achieve 2013 operating profit and adjusted earnings per share broadly level with 2012.

Fallon added: “The restructuring of the company that we are announcing today is designed to strengthen dramatically Pearson's position in digital education services and in our most important markets for the future - and to enable us to capture the once-in-a-generation opportunity that comes with being the world's leading learning company."

Shares fell 43p to 1,172p.

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