Pearson Group plc (PSO) shares were marked lower in early London trading Friday after the publishing group said it would cut thousands more jobs and slash its interim dividend as part of a $400 million restructuring program.
The details came within the group's first half earnings report, which showed sales rising 1% to £2.05 billion ($2.7 billion) and profits up to £107 million from £15 million in the first half of 2016 due in part to the strength of U.S. dollar against the pound. However, as part of a £300 million cost saving plan, the world's largest education company will reduce its headcount by a further 3,000 full-time employees, extending the overall jobs losses to 7,000.
Pearson shares were down 0.19% at 9:25 BST, changing hands at 654 pence each but have fallen more than 16% since the group unveiled its first profit warning on Jan. 17 thanks to what it called an "unprecedented period of change and volatility" in the education sector.
The company last year reported its biggest ever loss and in July announced it was selling part of its remaining stake in published Penguin Random House to Bertelsmann, which will raise $1 billion.
The efficiency program will generate cost savings from next year with about £70 million in 2018, an incremental of approximately £130 million in 2019 and the remaining £100 million impacting 2020 for a total of about £300 million in 2019.
Pearson also slashed its interim dividend to 5 pence from 18 pence in the first half of 2016, and plans a share buyback of £300 million.
The company said that sales are always significantly weighted towards the second half of the year.
The company maintained its full year outlook of adjusted operating profit of between £546 million and £606 million and adjusted earnings per share between 45.5 pence and 52.5 pence.
"Pearson has had a solid first half. We are making good progress on our strategic priorities and our guidance for 2017 remains unchanged. We are focused on maximizing performance through the critical second half," CEO John Fallon said in a statement. "Strong cash generation, prudent management of our balance sheet and implementation of our transformation plans are positioning us to be the winner in digital education, and create long-term sustainable value for our shareholders."
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