- Sales growth of 5% for 2022
- Profit ahead of expectations with 11% year-on-year advance
- Company ‘well positioned’ for further progress
A strong end to 2022 is an indication of the continuing successful transformation of education publishing group Pearson (PSON) - with a full-year trading update revealing profit ahead of expectations.
Shares in the company have already enjoyed a strong run over the last 12 months and built on that off the back of this morning’s announcement, albeit in modest fashion, with a 1.5% advance to 929.8p.
Pearson, previously the publisher of the Financial Times before its sale in 2015, has enjoyed false dawns over the last decade or so as it has contended with a transition towards digital learning and away from big, expensive academic textbooks on which it was able to command high margins.
Investors will hope the company is making a renaissance in its fortunes stick this time under CEO Andy Bird who took the helm in October 2020.
Off the back of a year of ‘strategic and operational progress’, Pearson is guiding for underlying sales growth of 5% and this is expected to translate to adjusted operating profit of £455 million, up 11% year-on-year. A number which is better than the one pencilled by in by analysts.
Pearson attributed this strong performance to a good showing in English language learning, virtual learning, workforce skills, and assessment & qualifications, which was somewhat undermined by an anticipated decline in its higher education business.
HIGHER EDUCATION STRUGGLES
Assessment & qualifications sales rose by 8%, with strong performances in the US and UK as exams resumed after Covid. Sales in the clinical assessment category were also higher supported by robust government funding and continued focus on health and well-being.
The 4% drop in higher education sales was blamed on a decline in enrolments as well as a shift to non-mainstream publishers including open educational resources online.
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The company is on track to achieve cost efficiencies of £120 million in 2023, with a big chunk coming from the higher education arm. Of this £120 million, £20 million will be used to offset inflationary pressures.
Pearson’s CEO Bird said: ‘his performance demonstrates focused execution and the ongoing momentum in the business as we continue to implement our new strategy that underpins our future growth. Pearson is well positioned to make further progress reflecting the structural growth in our markets, the continued need for upskilling and reskilling, and the strength of our offering.’
