Rare profits downgrade by Pearson surprises City

John Fallon, new chief executive of Pearson, looks to have inherited quite a few problems from his predecessor, Dame Marjorie Scardino, as he has been forced to cut the education giant's profit forecast.

The downgrade comes just three weeks after Mr Fallon took over, and follows his warning a fortnight ago that the group would take a £120m hit on the planned closure of its troubled UK adult training business.

Some City analysts were surprised by yesterday's trading statement, as it was the first time in years that the owner of the Financial Times and Penguin Books has cut its profit guidance. Mr Fallon, previously Pearson's head of international education, blamed "tough market conditions" as he revised down earnings per share to 84p – nearly a penny lower than Dame Marjorie's forecast last October.

Ian Whittaker, analyst at broker Liberum, expects Pearson's 2012 operating profits will be £935m. He warned that revenue growth in the fourth quarter might even have turned negative. While the downgrade may seem small, said Mr Whittaker, it was significant because it was "the first time in a long time" and it shows "structural pressures are increasing within the business".

He added it was a "double whammy" for Pearson because it is "a share with such a high rating and a reputation for upgrades".

Others were less downbeat. Numis Securities described Pearson's trading as merely "a touch light", but warned it sees "better value and excitement elsewhere in the sector".

The City's reaction will increase pressure on Mr Fallon, who is already facing questions about a possible sale of the FT for £1bn. Investment banks are said to have been lining up buyers, amid talk from analysts that Pearson should focus on its education business. There have also been reports that the Rothschild and Schroder families are looking to buy back Pearson's 50 per cent stake in The Economist, which is part of FT Group.

Pearson insists that Mr Fallon has "initiated no sale process", but the group recently admitted that the ownership of the FT "could change". Dame Marjorie had said the FT would be sold "over my dead body".

Full-year profits at the FT Group will be "significantly lower", after selling off non-core assets and incurring costs on the switch from print to digital. In a memo to staff, the editor of the Financial Times Lionel Barber said the newspaper was going to cut its headcount by 25, after adding 10 more digital jobs.

The publisher Penguin had a "good fourth-quarter". Shares fell 36p to 1,202p.

Sport
formula oneLive lap-by-lap coverage of championship decider
News
Lily Allen performs on stage at Splendour In the Grass 2014 on 27 July, 2014, in Byron Bay, Australia
people
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
PROMOTED VIDEO
News
video
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
Sport
Manny Pacquiao lands a blow on Chris Algieri
Pacquiao retains WBO welterweight title – and says he wants Mayweather next
Arts and Entertainment
tv
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
News
ebooksNow available in paperback
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
News
i100
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin