(AP) Publishing and education company Pearson Group PLC sharply cut its profit forecast Wednesday, citing an advertising decline at the Financial Times newspaper and other business publications after the Sept. 11 attacks on the United States.
Pearson said its FT Group full-year profits could be 40% lower than last year. FT Group accounts for around 20% of Pearson Group revenues.
Pearson said advertising bookings were down 40% in September compared with the same month last year, and Pan-European broadcaster RTL Group, in which Pearson has a 22% stake, has also been hard hit by the advertising downturn.
“We are now expecting profits to be significantly below our original plans for the year, almost entirely because of the weakness in advertising markets and to a lesser extent, the technology recession,” said Chief Executive Marjorie Scardino.
“These markets are cyclical in character and will bounce back,” she said in a statement.
The news initially sent Pearson shares down as much as 9% in early trading, but the stock recovered to close up 5.7% at 770 pence ($11.17).
All Pearson’s business newspapers, including Les Echos, Expansion, FT Deutschland, and The Economist, have experienced a major downturn in advertising, the company said.
Pearson said its technology book publishing sales were down around 20% in the first nine months of this year and that its profits there could be as much as 25 million pounds ($36.3 million) lower than had been expected. Technology publishing accounts for around 8% of group revenues.
But Pearson said its education division was more robust. In the first nine months, U.S. schools business posted a 9% increase in underlying sales. The U.S. college business increased underlying sales by 4%, although the company pointed out that the fourth quarter is the key sales period for this division.