Pearson has lifted its annual earnings outlook following continued high demand for English language learning courses.
The educational publisher now expects to report full-year adjusted operating profits of between £570million and £575million, a rise of £20million on its prior guidance.
Alongside this, the FTSE 100 group anticipates turnover growth, excluding its online program management and strategic review business, will be at the top end of its low to mid-single-digit range.
Forecast: Educational publisher Pearson now expects to report full-year adjusted operating profits of between £570million and £575million, a rise of £20million on its prior guidance
Total underlying revenue increased by 2 per cent in the third quarter, thanks partly to rising orders for the firm’s computer-based English language tests across most markets, especially India and Australia.
The company also saw a strong performance from its assessment and qualifications division, its largest by revenue, on the back of contract gains by its Pearson VUE testing centres business.
Since buying workforce assessment services provider PDRI in March, Pearson has won contracts from multiple US government agencies, such as the US Air Force, Drug Enforcement Administration, and the Department of Homeland Security.
Yet the group’s virtual learning arm saw sales drop by 29 per cent following the end of a major contract with Arizona State University, while its trading was also impacted by the disposal of its various local courseware operations.
However, outgoing chief executive Andy Bird said the firm’s performance ‘illustrates the continuing momentum across our businesses,’ adding that Pearson ‘is well-positioned for the next stage of its growth and development and poised to take advantage of long-term future opportunities.’
Pearson announced that Bird will depart on 8 January but remain a board member until March in order to ‘ensure a smooth transition.’
Bird joined the company three years ago during a particularly tumultuous period when pandemic-related restrictions hit orders for textbooks and in-person exams.
The ex-Disney International boss has sought to reorient the group’s focus towards providing digital educational resources and training services.
He oversaw the launch and rollout of the Pearson+ college learning app, which gives users access to a massive library of e-books and learning tools.
But Bird also faced backlash over his pay from investors, including before he took up the role, when he was awarded an annual package of up to £5.9million and a ‘golden hello’ worth £7million.
His successor, former Microsoft executive Omer Abbosh, has likewise faced scrutiny since it was announced last month that he would earn a £13million welcome bonus.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said 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 shares were 2.6 per cent up at 943.2p on just before midday on Monday, making them the third-highest riser on London’s blue-chip index.
