Pearson to cut 10% of global workforce in cost saving exercise

Global publisher Pearson has confirmed it would be cutting another 3,000 jobs as part of a global cost-cutting exercise.

In a statement on Friday (4 August), the struggling FTSE 100 company said the cuts, which represent nearly 10% of its global workforce, were part of a £300m efficiency savings drive it first proposed in May.

The company has been divesting assets at a canter in recent years. In 2015, it sold the Financial Times to Japan's Nikkei for £844m, and as well as its stake in The Economist.

Last month, Pearson sold a 22% stake in Penguin Random House to Germany's Bertelsmann for £776m, leaving it with a 25% stake in the book publisher.

Yet the company continues to bleed money. In 2016, it posted a loss of £2.5bn; the biggest in its history, following declining sales in North America, and a switch to online education material, which is yet to generate tangible profits.

The redundancies will be instituted from 2017 to 2019. Pearson also lowered its interim shareholder dividend by 72% to 5p a share.

George Salmon, equity analyst at Hargreaves Lansdown, said the company was facing some difficult choices in the digital age, but the interim dividend cut took the market by surprise.

"Pearson originally wanted to hold the dividend steady as costs came out and the proceeds from the sale of newspaper and publishing assets like the Financial Times, The Economist and Penguin Random House came in. This had to be hastily rethought as demand in North America fell sharply.

"More recent indications have implied the challenging conditions in the US are at least stabilising, and these savings would certainly boost the upside. Nonetheless much work still needs to be done."

If the publisher remains on track with the cuts, by 2020 it would achieve £1bn in efficiency savings. At 11:56pm BST, Pearson's share were down 1.35% or 9p at 660p.