- On track to deliver full year 2024
- New artificial tools announced
- Underlying adjusted operating profit up 4% to £250 million
Shares in Pearson (PSON) were down over 3% to £10.10 in morning trading despite the education media group remaining on track to deliver full year 2024 and reiterating guidance for 2025.
Beyond 2025, Pearson said it was positioned to deliver a compound annualised growth rate in the mid-single digits.
Underlying adjusted operating profit growth for the six months to 30 June was up 4% to £250 million.
Markets may have been disappointed with the circa 7% fall in sales to £1.75 billion from £1.88 billion last year.
Also, other divisions saw losses for the first half, including Virtual Schools where sales fell 1%, reflecting the previously announced contract losses for the current academic year.
Virtual Learning sales fell 8% and Higher Education sales were down 2%, in line with ‘phasing’ guidance.
BUYBACK ON TRACK
There was a smidgen of good news after the company said the £500 million share buyback was substantially complete.
As of 30 June 2024 £163 million, shares had been repurchased at an average price of 994p per share, representing 81% of the total programme.
The company has proposed interim dividend of 7.4p per share compared to 7p in the first half of 2023, an increase of 6%.
NEW AI TOOLS
Over the first half of the year, Pearson has been progressing well with expanding the reach of its AI study tools - extending to international editions and a further circa 80 titles.
The company confirmed that 70, 000 students have already started using Pearson’s AI study tools.
Pearson are also adding three new AI tools to Pearson+ Channels. Students, for example, will now be able to upload their syllabus to generate personalised learning experiences in the order they appear in the syllabus.
There is also a new AI instructor tool which will help instructors build assignments which will be added to 25 business, maths, science, and nursing titles in the US.
EXPERT VIEW
Analyst Roddy Davidson at Shore Capital highlighted Pearson’s robust performance, momentum, and the reassuring nature of the company’s outlook: ‘It is also good to see an exposition of the group’s growth strategy under the leadership of its (relatively) new CEO.
‘On a first pass basis the latter looks closely aligned with its current direction and plans and our core view that Pearson is well placed to benefit from a positive outlook for global learning spend and to enhance its offering via the next stage of its digital journey.
‘All the above provides confidence in our financial forecasts which suggest an attractive adjusted EPS (earnings per share) and DPS (dividend per share) and result in headline valuation metrics we regard as undemanding.’
