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Monday, 30 July, 2001, 09:14 GMT 10:14 UK
Pearson rules out FT redundancies
FT online front page
Costs at will be cut 45% in the second half
Pearson Group, the publisher of the Financial Times, has ruled out heavy redundancies at the newspaper despite sliding advertising revenue.

Marjorie Scardino, the group's chief executive, said in a conference call that the FT's costs will be cut by about 10%, by leaving vacated posts unfilled rather than through redundancies.

Pearson said advertising revenues fell 6%, with full-year advertising volumes set to slip 20% if current trends persist. The FT Group's full-year profits are expected to be about 15% lower than in 2000, it said.

But Pearson's pre-tax profit of 5m ($7.1m) in the first half, after the 88m cost of their internet business was stripped out, was much better than expected following a loss of 4m in the same period last year.

The group forecast a "good" year ahead.

"Overall, all of our businesses are performing strongly in their markets and, in a difficult economic environment, will report good profits for the year," Pearson said.

Internet cuts

The bulk of the cost-cutting pressure will fall on the company's internet activities.

Marjorie Scardino, chief executive of Pearson
Scardino: No forced job cuts at the FT
Costs in the online division, which produces the website, are to be cut 45% to 60m in the second half, the group said.

Pearson said it was facing "the sharpest advertising downturn for a decade", with the pain hitting business publishers more than the consumer sector.

Pearson, which is one of the world's leading publishers of educational materials, usually reports a weaker first half because of the seasonal demand for text books.

Learning benefits

As the dominant player in the US market, Pearson should benefit from the purchase of educational publisher National Computer Systems (NCS) last year.

NCS and Pearson's other book publishers Penguin and Dorling Kindersley are well positioned to benefit from President Bush's plan to spend 320m on texts in 2002.

But the group's involvement in European broadcaster RTL Group is likely to be a drag on its performance.

RTL, in which Pearson holds 22%, said today its full-year profit before interest, tax and amortisation will undercut last year's pro forma figure of 555m euros by about 10-15% thanks to the advertising slowdown in Germany.

By 0950 GMT, Pearson's shares were down 17 pence or 1.6% at 10.21, having earlier dropped as much as 4.8%.

Pearson's share price has fallen almost 40% this year.

Marjorie Scardino, Chief Executive
explains how long she thinks the current economic downtown will continue for
See also:

05 Jul 01 | Business
FT gets new editor
05 Mar 01 | Business
Pearson upbeat despite web costs
12 Mar 01 | Business signs deal with Hoover's
20 Jul 01 | Business
Web publishers charge for content
31 Jul 00 | Business
Pearson extends education division
18 Dec 00 | Business
Pearson steps up internet spend
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