LONDON (Reuters) - Pearson (PSON.L), the British education company struggling to cope with a downturn in its biggest markets, reported a further fall in sales on Friday as the loss of high-profile testing contracts in the United States hit first-quarter results. Penguin books are seen in a used bookshop in central London October 29, 2012. REUTERS/Stefan Wermuth/File Photo The biggest education company in the world has been hit by a string of profit warnings in recent years as political and economic strife have combined to derail its plans in the United States, its biggest and most important market. Volatile demand in the firm’s fast growth markets such as Brazil and Saudi Arabia have also rattled investor confidence. In the first three months of the year revenue from the group’s growth division fell. On Friday Pearson reported first-quarter underlying sales down 4 percent as the loss of contracts from U.S. states including New York and Texas took their toll. The group said however the impact of those losses would pass by the second half and that it was trading in line with its full-year forecasts. It now expects to report a modest adjusted operating profit before restructuring charges at its interim results. It also said it was making good progress in its latest restructuring program, designed to cut costs and focus the firm on fewer bigger opportunities in education. “We are making pretty good progress, we are trading in line with the financial goals,” Chief Executive John Fallon said. Shares in the 172-year-old group were down 1.6 percent at 1035 GMT (5:35 a.m. ET). Fallon has endured a rough ride since he took over in 2013. In the U.S., where Pearson generates round 63 percent of sales, an improving economy has led to school-leavers opting for employment over higher education while a political row over school testing resulted in lost contracts. It has forecast sharp profit falls in 2016 before a full recovery in 2018. Fallon said on Friday the U.S. assessment market was improving and that although the first quarter was small and hard to use as an indicator, he was feeling more positive about the education landscape in general. Virtual education programs in the U.S., Australia and Britain, where students can study at times that suit them via lessons on Skype, conference calls and online, is proving popular. “Pearson’s first quarter is by a long way the least meaningful quarter in terms of its relevance for and impact on full-year performance,” said Citi analysts in a note. “That said, it is encouraging that there is nothing in the release that significantly differs from the updates given in January and February. Indeed, the commentary on the progress of the restructuring program...is, at the margins, encouraging.” Pearson tied its fortunes to education publishing even more tightly last year when it sold the Financial Times and its stake in the Economist. With revenue falling it has cut costs and sought to improve its operations across the business. It said on Friday that of the 4,000 employees set to lose their jobs, almost half have been notified. Reporting by Kate Holton, editing by James Davey and Susan Thomas
Pearson announced 4,000 sales this week , reporting a 1.6 percent drop reflecting the loss of important contracts in America . The 172-year-old company has struggled in this week , with market volatility in fast-growth regions such as Brazil and America , as well as the economic downturn leading to a series of profit warnings. Despite the poor Q1 results, Chief Executive John Fallon , said Pearson was “trading in line with the financial goals.” The company recently announced it would be cutting Q1 jobs in a bid to make savings.