• Text size      
  • Send this article to a friend
  • Print this article

Pearson profit warning hits mood on FTSE

London's FTSE-100 Index slumped into the red as a profit warning from Financial Times publisher Pearson hit sentiment in a poor session for global markets.

The top tier finished 53.1 points lower at 6773.3 - a fall of 0.8% - while it was a similarly downbeat picture across Europe following the latest batch of US company results and a worrying Chinese manufacturing report overnight.

The Cac 40 in France and the German Dax fell 1% and 0.9% respectively.

Pearson's gloomy profit alert compounded falls in London, while shares in easyJet were also lower after the low-cost airline's latest update failed to keep up its record for exceeding expectations.

Investors were also sent heading for the exit after data showed activity in China's factory sector contracted in January for the first time in six months.

In currency markets, the pound climbed to its highest level against the US dollar since May 2011 - at 1.66 dollars amid continued speculation that interest rates will rise sooner than predicted.

A stronger-than-expected European manufacturing report saw sterling slip against a strengthened euro, to 1.21 euros.

Pearson led blue-chip declines as it slumped by more than 8% or 107p to 1191p after warning that full-year profits will be hit by higher restructuring costs and weaker-than-expected trading in its North American education arm.

Pearson said it had faced "tough market conditions throughout 2013", with education publishing in the US and UK - its two largest markets - suffering the most.

It said underlying annual earnings excluding restructuring costs were expected to fall to about £865 million - 5% lower than a year earlier and below market forecasts for around £900m.

Low-cost airline easyJet was also under pressure after forecasting a seasonal first half loss of between £70m and £90m, compared with £61m in the same period a year ago.

Shares dropped 4% or 71p to 1672p, despite an improvement in revenue per seat growth in the last quarter.

SSE shares were 3p higher at 1320p after the energy company said it was on course to boost profits by nearly 9% to £1.54 billion this year and raise its dividend payout to shareholders by 3%. It was joined on the risers board by under-pressure retailer Marks & Spencer after it received the support of brokers at Exane BNP Paribas. The stock was 3% higher, up 12.3p at 493.2p.

The biggest FTSE-100 risers were Fresnillo up 25.5p to 780p, Marks & Spencer ahead 12.3p to 493.2p, Randgold Resources 67p higher at 4188p and Smith & Nephew 9.5p stronger at 896p.

The biggest FTSE-100 fallers were Pearson down 107p to 1191p, easyJet off 71p to 1672p, Petrofac 39p lower at 1203p and ARM Holdings 31p weaker at 973p.

Contextual targeting label: 
Finance

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

207801