- Announces £350 million share buyback
- Full year dividend per share up 6% to 24p
- Accelerated artificial intelligence roll out
Shares in Pearson (PSON) gained over 4% to £13.93 in early morning trading as the education media group gave a positive full year 2025 outlook in line with market expectations.
Investors were also cheered by news of a £350 share buyback, highlighting the company’s strong cash generation, also leading to a 6% rise in the full year dividend , up to 24p per share.
Over the past year, Pearson shares have gained 44%.
The company reported a 3% rise in underlying group sales and a 10% rise in group adjusted operating profit of £600 million.
English Language Learning delivered a strong performance with sales growth of 8%, driven by Institutional, with PTE (Pearson Test of English) performing well against a tough market backdrop.
Workforce Skills sales grew 6%, with a solid performance in both Vocational Qualifications and Workforce Solutions.
However, sales in Virtual Schools and Virtual Learning fell 1% due to previously announced partner school losses and 4% respectively due to the ending of the OPM (online programme management) contract with ASU (Arizona State University) in the first half of 2023.
WHAT DID THE CEO SAY?
Omar Abbosh Pearson CEO said: ‘We [also] continue to focus on expanding our presence in the highly attractive enterprise skills market at a time where Pearson can play an important role in helping bridge the critical skills gap that impacts the economy, workforce, and individuals.
‘We are well set up to deliver our financial guidance, allowing for further investment and attractive returns for shareholders.’
Abbosh went on to highlight roll out of AI technologies across Pearson’ business to further scale learning products and services with the help of an extension to the commercial relationship between Pearson VUE and AWS Cloud infrastructure (Amazon Web Services) part of tech giant Amazon (AMZN:NASDAQ).
TOP END OF EXPECTATIONS
Russ Mould, investment director at AJ Bell said: ‘Pearson has made some decent strides in recent times as it transitions from analogue to digital. Once reliant on selling big, expensive academic textbooks, the company has achieved a leading role in online learning.
‘Profit for the year came in at the top end of expectations with strong growth in English language learning. Management signalled a degree of confidence in the outlook as it announced a £350 million share buyback and a 6% uplift in the final dividend.
‘Alongside the numbers, the company has announced an expansion of its existing tie-up with Amazon’s AWS cloud computing operation. AWS will support Pearson to further integrate AI into its offering.
‘Pearson has already brought in innovations like an AI tutor which helps children with their homework, and an assessment tool for teachers to help them with lesson plans. While there will be excitement about the potential, investors will increasingly want to see evidence of how AI is delivering returns for the business too.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Steven Frazer) own shares in AJ Bell.
