24th Jul 2020 09:35
(Alliance News) - Pearson PLC on Friday said the first-half sales were hurt by test centre and school closures due to the Covid-19 pandemic, but the education services company remains on track to deliver annual adjusted operating profit consistent with market expectations.
The FTSE 100-listed company also said it hopes to benefit from increased usage of virtual schools.
Shares in the company were trading 5.3% lower at 521.00 pence each in London, the worst blue-chip performer on Friday.
Chief Executive Officer John Fallon said: "Covid-19 has had a major impact on trading, but we are encouraged by the improving trends and pick up in sales in June. The long-term shift to online learning is accelerating. The lead indicators of digital take up of our products are encouraging, and signals that our focus on experience, outcomes and affordability will prove a winning combination."
Pearson's sales for the six months to June 30, decreased by 18% to GBP1.49 billion from GBP1.83 billion, with portfolio adjustments reducing sales by GBP53 million and currency movements increasing revenue by GBP25 million.
Stripping out the impact of portfolio changes and currency movements, revenue was down 17% in underlying terms due to 5% growth in Global Online Learning, more than offset by a 27% decline in Global Assessment, a 23% decline in International segment and a 14% decline in North American Courseware.
Covid-19 impacted sales by GBP260 million in the first half.
First-half pretax profit increased year-on-year to GBP35 million from GBP13 million largely due to the gain on sale of Penguin Random House. Statutory operating profit jumped to GBP107 million from GBP37 million
Adjusted operating profit - the company's preferred profit measure - declined to a loss of GBP23 million from GBP144 million with a profit impact of GBP140 million from Covid-19 trading pressures after cost mitigations.
There was an expected trading decline of GBP20 million, with impact from inflation of GBP15 million, other operating factors of GBP15 million, disposals of GBP14 million, partially offset by restructuring savings of GBP35 million and foreign exchange savings of GBP2 million.
London-based Pearson, in line with its policy, has declared an unchanged interim dividend of 6.0 pence per share.
The company ended the period with net debt of GBP982 million, down from GBP1.38 billion, including leases of GBP662 million.
By Tapan Panchal; [email protected]
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