Pearson warns on earnings hit from weak U.S. demand

It now expects earnings per share after restructuring charges to be around 70 pence

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British publisher Pearson warned its 2013 earnings per share would be lower than expected due to higher restructuring costs and poor demand in its education business in North America during its key selling quarter.

Pearson, the education and media group which owns the Financial Times newspaper and runs education and testing businesses around the world, said it had been hit by lower underlying margins in its North American Higher Education business, particularly in the fourth quarter.

It now expects earnings per share after restructuring charges to be around 70 pence, compared with consensus forecasts of around 76 pence.

It said earnings on an adjusted basis before restructuring charges would be around 83 pence, which it said was in line with previous guidance.

Liberum analyst Ian Whittaker said the real problem was with restructuring costs, which were higher than expected at 170 million pounds ($281.9m) and savings which were lower than forecast, at $66m.

“The net 130 million pounds impact is 30 million pounds above the 100 million pounds guidance,” the group said.

Chief Executive John Fallon said the group had made good progress but its trading had been weaker than expected, particularly in North America.

“With trading conditions still challenging in 2014, this further underlines the importance of the work we started in 2013 to reduce our established cost base and redirect our investment towards our biggest future growth opportunities,” he said, in reference to digital sales and emerging markets.

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