Job cuts on cards after 'FT' loses £15m

Pearson's Financial Times has slumped to a £15m loss in the first half of this year as advertising revenues at the newspaper continued to deteriorate.

Reporting interim results, Pearson announced a new cost-cutting drive at the FT, which will see it extract savings of £15m next year, on top of the £13m savings programme already announced for this year. The company said this would entail job losses but put no number on it. The newspaper lost £23m last year, and analysts were yesterday predicting this year could see a loss of up to £30m.

Pearson reported an underlying loss of £1m, for the six months to 30 June, compared to a £26m profit last year. At the pre-tax level the loss this time was £138m after goodwill and one-off items. The company said that an advertising recovery at the FT remained hard to predict but its two other businesses - educational publishing and Penguin books - should rebound strongly in the second half.

Marjorie Scardino, the chief executive, said: "We have one headline. We're on track for making our full-year. That's a pretty big headline."

The company's earnings are traditionally weighted towards the second half of the year, when US schools and colleges buy texts books and Penguin sells more books in the lead up to Christmas. This year that second-half bias would be particularly marked, Ms Scardino said.

There was a £26m loss at the educational business for the first half, with a £21m profit at Penguin and a £43m profit at the FT Group, which includes other business publications and a data business.

Penguin has a strong release list for the rest of 2003 and has already got off to a good start for the second half. A book on Katharine Hepburn sold 700,000 copies in two weeks, while a modern classic on its back catalogue, John Steinbeck's East of Eden, stormed up the US bestseller lists after a recommendation on Oprah Winfrey's television show. The book has sold 1.2 million copies in the last four weeks, more than it has sold in the previous 30 years. The FT saw advertising down by 18 per cent in the first half, with some weeks during and immediately after the Iraq war recording a reduction of more than 30 per cent.

Ms Scardino said there were encouraging signs in US advertising, which should feed through here later. She said FT ad revenues should get no worse now but added that it was not possible to say when the upturn would come. The FT should break even next year, even with no advertising recovery, she said.

Johnathan Barrett, analyst at Teather & Greenwood, said next year's savings programme was welcome. "It's good to see that they've stepped up the cost savings at the FT," he said.