- Sales growth driven by language learning
- Full year earnings to meet market expectations
- 2023 guidance could spur earnings upgrades
Educational publishing group Pearson (PSON) pleased investors with its nine-month trading update and its commitment to its full year earnings target.
Against a weak market, Pearson shares were the top risers in the FTSE 100 index gaining as much as 7.5% to a post-pandemic high of 955p.
WHY ARE PEARSON SHARES RALLYING?
Underlying group revenues for the three months to September were up 7% thanks to an ‘outstanding’ result in English Language Learning which delivered 36% year on year growth.
The Workforce Skills division also reported strong growth, with sales up 20% on last year, while Virtual Learning and Assessments grew their revenues by high single digits.
‘This has been another good quarter for Pearson, and I am pleased with the continuing momentum the business is demonstrating through our sharp focus on delivery’, said chief executive Andy Bird.
‘We are executing well on our plan for accelerated margin improvement’, added Bird.
FULL YEAR GUIDANCE CONFIMED
Sales for the first nine months also rose 7%, leading the company to confirm it was ‘on track’ to meet market expectations in terms of full year earnings.
The current company-compiled consensus is for operating profits of £426 million based on an average exchange rate of $1.30 to the pound.
The company has been through a lengthy transformation process, moving away from old-school printed material to online digital tools for schools, education and to meet the workforce skills gap.
As well as sticking to its earnings target, the firm said it was aiming to achieve at least £100 million of efficiencies during 2023 which would ‘accelerate improved margin expectations’ from 2025 to as early as next year.
That suggests the current forecast for 2023 operating profits of £470 million could be revised up significantly.
