- Underlying sales growth of 5%
- No further buybacks announced and decline in Higher Education
- 28% increase in profit expected for 2023
Education publishing group Pearson (PSON) reported a big increase in 2022 profit and a positive outlook for 2023 but disappointed investors slightly by not announcing a new share buyback.
Pearson reported an 82% rise in pre-tax profit to £323 million for 2022 compared with £177 million in the same period last year though the adjusted figure was up a more modest 18% to £456 million.
The company expects low to mid single digit underlying sales growth in 2023 with adjusted operating profit on track to hit the consensus forecast of £585 million - implying a 28% advance compared with 2022.
Nevertheless, the shares were down more than 2% to 898p in early trading as it also reported a fall in Virtual Schools revenue in the 2022/23 academic year impacted by the ‘Covid-19 cohort’ unwind and a fall in Higher Education revenue.
The drop in the share price follows an extremely strong run for the shares, up more than 40% in 12 months, and Pearson CEO Andy Bird, remained upbeat for the year: ‘These results are testament to the strong momentum that we've been building operationally and strategically over the past 24 months.
‘Our portfolio continues to strengthen, with our new Workforce Skills talent investment platform created to leverage the structural growth in our markets and increased need for upskilling and reskilling. This will be a key growth driver for Pearson over the coming years.’
DIGITAL EDUCATION IS THE KEY
Pearson, previously the publisher of the Financial Times before its sale in 2015, has been trying to reposition itself as a leader in digital and education learning in the interim.
In 2022, it achieved 9% underlying growth in group digital and digital-enabled sales. The roll out of its Pearson+ e-textbook platform has continued leading to a threefold increase in paid subscriptions to 406,000 in the Fall semester (Fall 2021: 133,000) and registered users growing to 2.83 million (Fall 2021: 2.75 million).
The education publishing group has continued to invest in the platform launching 18 study channels to grow Pearson+ and successfully integrated its online language learning app Mondly into Pearson+ broadening the appeal further.
Assessment & Qualifications sales were up 8% driven by strong performances in US Student Assessment and UK & International Qualifications as exams resumed, and in Clinical Assessment due to good government funding and continued focus on health and wellbeing.
Pearson VUE professional exams business saw particularly strong growth in the IT and healthcare segments.
Other highlights include English Language Learning up 24% due to increased Pearson Test of English (PTE) volumes, which were up 90%, as global mobility continued to improve with border re-openings and market share gains in India.
NO BUYBACK, BUT DIVIDEND UP
The company completed its £350 million share buyback with a total of 42.3 million shares repurchased in 2022 but has not extended the programme. Pearson has proposed a final dividend of 14.9p (2021: 14.2p) which equates to a full year dividend of 21.5p (2021: 20.5p).
Disclaimer: The author (Sabuhi Gard) owns shares in Pearson.
