30th Oct 2023 14:25
(Alliance News) - Pearson PLC on Monday lifted its annual guidance as the publisher of educational materials showcased its "resilience" in difficult economic conditions.
It now expects group revenue growth, excluding OPM and strategic review businesses to be at the higher end of its existing low-to-mid-single-digit guidance, and upgraded guidance for adjusted operating profit to a range of GBP570 million to GBP575 million, which is around GBP20 million higher than prior guidance.
OPM, or online programme management has been excluded "to aid comparison to guidance" following Pearson's sale of the Pearson Online Learning Services business.
In 2022, Pearson booked sales of GBP3.84 billion, which was up 12% from GBP3.43 billion in 2021. Adjusted operating profit was GBP456 million, up 18% from GBP385 million.
Hargreaves Lansdown analyst Sophie Lund-Yates commented: "Every day's a school day and educational specialist Pearson can teach us all a thing or two about resilience. While the wider economy is under pressure, the likes of vocational testing, English Language Learning and broader assessments and qualifications are all being taken up in force, boosting Pearson's top and bottom line. At a time when economic wheels creak is often a time when we see increased demand for upskilling and retraining, which means that even in the face of a recession, Pearson has enviable assets.
"This isn't just a case of helpful trends, Pearson has put in an enormous amount of legwork to improve its digital offering and reduce exposure to the declining physical courseware sector. The biggest question now is where meaningful growth will come through – the incoming CEO's being handed a company in much better condition and with the grunt work now complete, making his mark could be a trickier task."
Pearson also confirmed its new chief executive, Omar Abbosh, will start on January 8, when Andy Bird will depart from the post after leading the London-based firm since 2020.
The firm said underlying revenue growth in the third quarter was 11% for the Assessment & Qualifications division. It was 21% for English Language Learning, and 3% for Workforce Skills. Underlying revenue was down 29% for Virtual Learning and 8% for Higher Education.
For the full nine months, A&Q underlying growth totalled 8%, while for English Language Learning it was 34% and for Workforce Skills it was 8%. Virtual Learning suffered a 20% underlying revenue fall in the nine months, and Higher Education a 5% decline.
Swiss bank UBS said Pearson did better-than-expected in A&Q during the nine months, though it fell short in Higher Education.
UBS predicted nine-month growth of 7% in A&Q, and a 1% decline in Higher Education. The English Language Learning outcome was just ahead of a UBS prediction of 33% growth, but Workforce Skills fell a hair short of the 9% growth the Swiss bank had pencilled in.
It was the Higher Education "miss" which UBS believed investors would respond poorly to.
Shares were largely unscathed on Monday afternoon, however. The stock rose 2.3% to 940.60 pence each in London on Monday afternoon. Shares are largely flat year-to-date but have surged 25% since tumbling in early-May after its US rival Chegg Inc warned that its finances were being hit by the popularity of ChatGPT.
By Eric Cunha, Alliance News news editor
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