Pearson supported by demand for English lessons

Pearson’s profits increase as exam schedules normalize and English courses gain popularity

  • Britain’s biggest education company has announced its first half profit rose to £131million
  • Revenue growth was primarily driven by its assessment and qualification arm
  • Pearson has expanded its digital offering as textbook sales decline

Pearson’s profits jumped in the first six months of 2022 amid a significant rebound in the number of students taking exams and huge demand for English tests.

Britain’s biggest education company said its first-half profit rose to £131m from just £18m, thanks to healthy sales growth in four of its five new global divisions .

Revenue growth was primarily driven by its assessment and qualification arm, as in-person examination business returned to normal, contracts were won in the United States and the level of mental health assessments exceeded forecasts.

Growth: Pearson said first half profits rose to £131m from just £18m last year

That offset a drop in trading at its computer-based testing business VUE, following changes to a contract with the Drivers and Vehicle Standards Agency.

The division also recorded adjusted operating profit of £137million, an increase of around a third year-on-year, helping the FTSE 100 group to amass total underlying profit of £160million. of pounds sterling.

By comparison, the publisher’s English lessons business still saw a small loss of £4m, even though the easing of travel restrictions meant more people taking its tests .

Pearson shares were the first riser in the FTSE 100 index on Monday, climbing 12.7% to 852.6p, more than double the percentage rise achieved by second-placed HSBC Holdings.

For much of 2020 and early 2021, Pearson was financially impacted by the mass closure of testing centers and cancellation of exams as governments sought to contain the Covid-19 virus.

On top of that, the pandemic has accelerated the long-term decline in demand for its high-margin textbooks and for e-learning services, particularly in the United States.

In response to this growing trend, the London-listed company has launched a series of strategies to improve its digital offering, identify cost savings and restructure its portfolio, with chief executive Andy Bird spearheading much of the change.

This involved reorganizing the business into five main divisions, including e-learning, higher education and workforce skills, downsizing its office space, and selling off many business d ‘editing.

Pearson agreed to the £163 million sale of its Italian and German K12 courseware divisions to Finnish media giant Sanoma Corporation in June and sold Brazilian learning systems COC and Dom Bosco last October to Arco Platform.

And to expand its online portfolio, the group has purchased Credly, the world’s largest professional credentialing platform, and Mondly, a free language-learning app that lets users study a new language via virtual reality. or increased.

Pearson itself was the subject of three recent takeover bids by Apollo Global Management, all of which were rejected by its board of directors, which claimed the private equity firm’s offers were too bass.

Chief Executive Andy Bird said: “Pearson delivered another encouraging financial performance in the first half of the year. We continue to make excellent strategic and operational progress, with momentum across the business.

“We are already seeing clear benefits from our increasingly diverse learning ecosystem, with Pearson serving more people throughout their lifelong learning journey.”

Thanks to these strong results, Pearson maintained its full-year guidance for the 2022 financial year and increased the interim dividend by 5% to 6.6 pence per share.

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Sylvester L. Goldfarb