Monday 17 October 2016 7:34 am

Sales at former FT publisher fall, but expectations steady thanks to reduced cost base

Pearson's share price fell seven per cent on Monday morning after the education business, which sold the Financial Times last year, reported sales falling at a greater pace than anticipated.

But the FTSE 100 company said its cost base was also lower than expected, with 2016 guidance and 2018 goals unchanged.

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Pearson expects to report an adjusted operating profit of between £580m and £620m for 2016.

And earnings per share are expected to come in at between 50p and 55p. The firm said that if current exchange rates persist for the rest of the year, this range will likely increase by 4.5p.

Pearson also said in a nine-month interim management statement this morning that it expects an operating profit of £800m or more by 2018.

Pearson said that sales for the nine months had declined by seven per cent in underlying terms due to “expected declines in assessment revenues in the US and UK, but also declines in North American higher education courseware”.

Pearson said that more than 90 per cent of 4,000 full-time staff who will lose their jobs under a restructuring plan have now been informed. Restructuring costs are expected to total £320m this year.

“Our competitive performance remains strong in a tough market. We have achieved more than 90 per cent of the growth and simplification restructuring programme we announced in January,” said chief executive John Fallon.

“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.”