Pearson, the education and publishing group, has bounced back to sales growth but cautioned about further exam cancellations and lockdowns that have hammered its business through the coronavirus pandemic.
Underlying growth in Pearson’s online learning businesses of 30 per cent helped the group report a 4 per cent increase in sales in the fourth quarter, its only positive three-month period of the year.
The improved performance across the board in the final three months of the year was welcomed by investors, with shares in Pearson jumping 7.2 per cent in early trading. After falling to its lowest point in May since the mid-1990s, the stock has climbed by more than two-thirds, with confidence growing about potential for the group’s online learning business and new management.
Andy Bird, a former Disney executive who took over as chief executive in October, said it had been an “incredibly challenging year” for the company but praised his team for being able to end the year meeting market expectations for profit and growth.
“Uncertainty remains in the near term as a result of the ongoing pandemic, with further lockdowns, exam cancellations and reduced global mobility,” he said. “However, I am excited about our future given the shift to online learning and the huge opportunity to help more people develop the skills they need.”
Mr Bird is expected to give more details in March about his strategy to make Pearson, the world’s biggest education group, a more “consumer focused” company.
In November he created a “direct to consumer” division to accelerate its digital transition and expand the range of learning products sold straight to individuals as well as via institutions. “We start the year with momentum, pace and confidence,” he said on Wednesday.
Roddy Davidson of Shore Capital noted the “significant improvement” in the group’s performance in the fourth quarter, and said the company was well placed to benefit from a rebound in education spending. “That said, we remain cautious on short-term trading prospects and wait to get a better insight into its new CEO’s plans,” he added.
Full-year sales were down 10 per cent with the company expecting adjusted operating profits in the range of £310m-£315m, in line with analyst expectations.
Sales at Pearson’s struggling North American courseware division fell by 8 per cent, with flagging textbook revenue partly offset by a big shift to digital purchases. Division sales declined by 13 per cent through the year.
Pearson’s global assessment and testing division reported 3 per cent growth in the fourth quarter, while international sales were flat. Both had suffered heavily through 2020 because of lockdown restrictions, with full-year underlying sales declines of 14 per cent and 19 per cent respectively.
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