Financial Times-to-Penguin group Pearson reported a fall in profits over the last year after being hit by a downturn in advertising.

The group said pre-tax profits for the year to December 31, before one-off items, fell 12 per cent on the previous year, from £333 million to £294 million.

Pearson said falling advertising-related profits and an increased interest charge more than offset improvements elsewhere.

Chief executive Marjorie Scardino said: "The recession in advertising and technology markets meant it was not possible last year to build on the steady improvement in performance which our shareholders have come to expect.

"Good growth in our less-cyclical businesses allowed us to keep the overall level of sales and profit roughly level with the year before and, as we look ahead into this year, we are confident of resuming our progress whatever the economic climate."

Finance director John Makinson said: "Given the markets we are trading in, we don't think this is by any means a bad result.

"We are not seeing any deterioration in the advertising climate right now but we are not calling any recovery.

"We are always looking to reduce costs when we can but we have made a budget on this year on the assumption the advertising markets do not recover."

He said the group had contingency plans if markets deteriorated.

Mr Makinson said the group had reduced employees through non-replacement of staff and a recruitment freeze.

Shares in the group surged ten per cent ahead as the profits, although down, were better than expected.

Penguin books division sales were up nine per cent, helped by a full-year contribution from the Dorling Kindersley illustrated reference publisher bought last year.

Revenues for the education business, which has large operations in the United States, were up 25 per cent and operating profits rose 16 per cent.