Pearson hopes education demand will fend off economic headwinds
Pearson said it expects demand for its courses and textbooks to weather global economic headwinds as digital shift at the FTSE 100 shows signs of success, sending stocks Theirs increased by 10%.
The group said on Monday that it expected its full-year profit margin to hit its mid-teens target next year – two years ahead of schedule – thanks to cost-cutting. and strong demand for their courses as Covid-related restrictions ease.
CEO Andy Bird, the former Disney executive who took over in 2020, has shifted Pearson’s focus from a traditional textbook publisher to a digital, people-focused brand. consumption for learning opportunities outside of school and college, such as adult re-skilling programs.
Bird said the shift to online adult education and staff training will help insulate the group from the worst of the recession, as services are “non-discretionary.”
“We are in the business of providing lifelong learning, which makes us a flexible and diverse team,” he added.
Shares in Pearson jumped 10 per cent to 835p in London on Monday morning, although this is still well below the 870p a share, or £7bn, bid from private equity group Apollo that the board rejected in March.
Bird’s comments come as Pearson reported revenue of £1.8 billion in the six months to June 30, up from £1.6 billion a year earlier. Pre-tax profit of £148m was significantly higher than the £9m reported in the same period last year due to lower asset liquidation and restructuring costs. Essentially, pre-tax profits rose 22% year-on-year to £160m.
Sally Johnson, chief financial officer, said Pearson has benefited from the reopening of international borders, which has led to a spike in demand for its English courses.
“Covid is something behind us and we are in a new normal,” Johnson said. “We are resilient in a degrading environment.”
Pearson, which employs 21,000 people worldwide, said it had identified the £100 million savings that will come into effect next year, including “streamlining categories, products and content, further cut corporate assets and other productive activities.”
The first half numbers were lifted on the back of strong performance in the company’s evaluation and qualification departments as core sales increased 16%, with sales in English units. 22% increase. However, basic sales at Pearson’s higher education unit were down 4% year-over-year.
Under previous chief executive John Fallon, Pearson sold off stakes in The Economist, Financial Times and Penguin Random House and issued seven profit warnings over the years, as it struggled to adapt to the market. American educational institutions are moving online.