Pearson, the global education company battling a collapse in its biggest market, said it would take further costs out of the business and look to sell some assets after posting a $3.3 billion pretax loss and a sharp rise in debt.
Pearson (PSORF), which has issued five profit warnings in four years after students in the United States started renting text books rather than buying them, said its loss included an impairment of goodwill of 2.5 billion pounds, reflecting the challenges facing the business.
Analysts said the full-year results would likely be taken well however as the British firm showed it was taking action to tighten its costs and showed no further deterioration in trading since its last profit warning in January.
The group said it planned to sell its English language learning business GEDU and was looking for a partner to invest in its Wall Street English (WSE) unit.
“Our priorities for 2017 are clear,” said Chief Executive John Fallon. “We will continue to accelerate our digital transformation, simplify our portfolio, control our costs, and focus our investment on the biggest growth opportunities in education.”
Pearson reported 2016 adjusted operating profit of 635 million pounds, down 21% on the year but slightly better than expected due to tight cost control. Net debt increased to 1.1 billion pounds, from 654 million pounds the year before, but its operating cash flow jumped.
“Expect relief on lower debt, disposals and cost saves,” analysts at Citi said.