Pearson plan £150m restructuring programme after Penguin merger
British publisher Pearson, owner of the Financial Times newspaper, said on Monday that its annual net profits slumped 66 percent in 2012 as its print business came under pressure from fast-growing
Profits after tax tumbled to £326m last year compared with net earnings of £957m in 2011, while the group said it expected a tough 12 months ahead.
"Trading conditions are tough and structural changes mean many of our traditional publishing activities are under pressure," Pearson's new chief executive John Fallon said in the company's earnings statement.
"But the underlying demand for effective education remains immensely powerful and our developing world and digital services businesses have real scale and momentum."
Pearson said it would restructure aspects of the company "to strengthen dramatically" its position in digital education services and emerging markets.
Company veteran Fallon recently succeeded Marjorie Scardino, who stepped down as chief executive at the end of 2012 after 16 years in the top job.
Just a couple of months before she departed, Pearson announced that its Penguin division had agreed to a merger with rival Random House to create a leading publisher of English-language books as the pair seek to cut costs in the face of fast-rising e-book publishing.
Pearson and Random's parent, the German media giant Bertelsmann, are to form a joint venture to be known as Penguin Random House, which it expects to complete later this year.
Pearson on Monday said it planned to spend £150m in restructuring costs during 2013, some of which would be to separate Penguin activities from its parent's central services and operations.
"We expect this transformation programme to generate approximately £100m of annual cost savings from 2014," Pearson said.
"In 2014, we intend to reinvest the £100m of cost savings in the organic development of our fast-growing digital, services and emerging markets businesses and further restructuring, including the Penguin Random House integration."