Pearson sees profit recovery in 2018 as tough markets persist

* Pearson (Xetra: 858266 - news) see sales picking up in 2017

* Company has ditched media to focus on education

* Shares (Berlin: DI6.BE - news) rise on signs of stabilisation (Adds exec comments, analyst reaction, shares)

By Paul Sandle

LONDON, Feb 26 (Reuters) - Pearson, the British education company struggling to adapt to tough conditions in markets from the United States to China, said declining sales would stabilise this year before starting to grow again in 2017.

The company, which has been suffered after more young people in the United States took jobs rather than enrolling in college, posted a 2 percent drop in operating profit to 723 million pounds ($1.01 billion) for 2015.

Sales of 4.47 billion pounds were also down 2 percent, although they met analysts' expectations which had been downgraded in October after the company warned on profit.

"The cyclical and policy challenges we face in our major markets are persisting for longer than we expected," Chief Executive John Fallon said on Friday.

He said sales would start to stabilise by the end of this year and then "start to provide a modest tailwind".

Shares in the group, down 43 percent in the last 12 months, were trading up 5.5 percent at 845.5 pence at 1030 GMT.

Pearson said last month it would cut 4,000 jobs -- 10 percent of its workforce -- and restructure once again to tackle pressures hitting markets from North America to South Africa after deciding to focus on educational publishing.

The company last year sold the Financial Times and its stake in The Economist to concentrate on education.

It (Other OTC: ITGL - news) said the poor performance in emerging markets would be addressed by the restructuring it announced last month.

Pearson said it expected adjusted operating profit to fall again this year, to between 580 and 620 million pounds, but added the restructured group should deliver profit at or above 800 million pounds in 2018.

Analyst Roddy Davidson at Shore Capital said the results did not appear to contain any significant surprises, coming soon after January's warning of sharp profit falls in 2015 and 2016. He was encouraged to see the company intensifying its efforts to solve the problems it faces, both in the business and in its markets. ($1 = 0.7154 pounds) (Editing by Keith Weir)