Pearson’s share price dived over 14 per cent this morning as it warned that profits will fall to the bottom of its guidance range this year.
The education publishing brand said “weaker than expected” sales in its US higher education courseware division mean adjusted operating profit will hit £590m, far off the £640m it had hoped to hit.
Pearson’s courseware business makes up a quarter of its overall revenue, but trading has slipped 10 per cent in the first three quarters of the company’s financial year.
The publisher blamed students moving faster than anticipated away from print products in favour of educational resources online.
That means the firm now expects a fall between eight per cent and 12 per cent for its US higher education division, which was already under pressure from open source alternatives and a falling number of university students.
Its own digital transition is underway, with Pearson expecting to derive 65 per cent of revenues from digital channels by the end of this year, from 55 per cent last year.
But the FTSE 100 member said group revenue was “broadly flat” in the nine months of the year so far.
Core markets were up five per cent, but the US market dropped three per cent.
“The third quarter has been significantly weaker than we expected in US Higher Education Courseware,” said chief executive John Fallon.
“Whilst difficult in the short term this places more importance on our work to remake this part of Pearson and we are exploring new ways of deploying our new technology platform so that we can offer students highly affordable, convenient, adaptive, digital courseware.
“We still expect revenue across Pearson as a whole to stabilise this year, with encouraging growth in many parts of the company.”
Chair Sidney Taurel added: “There are still challenges to overcome in our US Higher Education Courseware business, which we are all very focused on.”
Pearson’s share price dropped 14.2 per cent to 738.2p in early trading.
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