--- Adds broker comment and updates share price ---
Education publisher Pearson (LON:PSON) warned on profit but maintained its dividend and announced 4,000 job cuts, boosting its shares.
Pearson, which sold the Financial Times and related businesses last year, forecast 2016 operating profit and adjusted earnings per share - before restructuring costs - of between £580mln and £620mln and between 50p and 55p, respectively. That was worse than broker Liberum Capital's forecast of £643mln.
But the group said it was holding its dividend at the 2015 level and announced a £320mln restructuring drive involving cutting 4,000 jobs, according to the FT.
Pearson said the shake-up would help it save about £350mln a year, with about £250mln of the savings in 2016 and a further £100mln in 2017.
Liberum, which has a 'key sell' recommendation on Pearson, said the announcement "does not deal with the fundamental problems facing this company".
It also pointed out that while Pearson was maintaining its dividend, it was scrapping the policy of dividend growth.
Liberum analysts said: "Nothing in here addresses our main concern, ie. US higher education (38% FY16E profits) where students are buying fewer $150-200 textbooks."
It said the in-year benefits from restructuring would be offset by the loss of operating profit from disposals made in 2015, ongoing tough trading in its largest markets, the reinstatement of the employee incentive pool and other operational factors.
The group added: "With the full benefits of our restructuring programme, the launch of new products, and stability returning to US college enrolments and the UK qualifications market by the end of 2017, we expect adjusted operating profit to be at or above £800mln in 2018."
Chief executive John Fallon said: "Our competitive performance during the last three years has been strong, but the cyclical and policy related challenges in our biggest markets have been more pronounced and persisted for longer than anticipated.
"Faced with these challenges, we are today announcing decisive plans to further integrate the business and reduce the cost base, rationalise our product development and focus on fewer, bigger opportunities."
Shares in Pearson rose 98.5p, or nearly 15%, to 756p. Shore Capital, which said it was keeping its 'hold' recommendation on the stock for the moment, said: "Whilst it is disappointing to see further restructuring costs and little if any improvement in underlying markets we are broadly encouraged that PSON has decided to redouble its efforts to meet external and internal challenges.
"We believe the market will also be relieved by its decision to maintain dividends at 2015 year levels."