Pearson cuts dividend and outlook to battle U.S. market slump

LONDON (Reuters) - Troubled British publisher Pearson cut its profit outlook for the next two years, lowered its 2017 dividend and said it may sell its stake in Penguin Random House to help it battle the "unprecedented" changes hitting key markets.

Pearson, which has issued a string of profit warnings in recent years due to weakness in the U.S. and volatility in emerging markets, said it had been forced into further drastic action to counter the disruption caused by the move to digital.

Pearson said a cost cutting programme would enable it to hit 2016 operating profit guidance but that the 2017 figure was now seen around 180 million pounds ($222 million) lower than it had expected a year ago.

It has withdrawn its operating profit goal for 2018 and said it would have to "rebase" its dividend from 2017 onwards.

Pearson, which owns 47 percent of the Penguin Random House book venture with Bertelsmann , said it may seek to sell its stake or recapitalise the business and extract a dividend in order to protect its balance sheet.

Bertelsmann said it was open to increasing its stake.

Pearson will pay an overall 2016 dividend of 52 pence, in line with 2015, but said for 2017 it intended to rebase the payout.

"The education sector is going through an unprecedented period of change and volatility," Pearson's Chief Executive John Fallon said.

"Our higher education business declined further and faster than expected in 2016."

($1 = 0.8103 pounds)

(Reporting by Kate Holton, editing by James Davey and Paul Sandle)