logo-loader

Pearson says it expects sales to stabilise this year before growing again in 2020 as it posts in-line 2018 profit

Last updated: 21:50 22 Feb 2019 AEDT, First published: 19:42 22 Feb 2019 AEDT

Pearson building
Pearson's closing net debt of £143mln as at 31 December 2018, down from £432mln at the same stage a year earlier was a positive

Pearson PLC (LON:PSON) said it expects company-wide sales to stabilise this year before growing again in 2020 and beyond, as the educational publisher reported in-line 2018 profit and a big fall in net debt.

The FTSE 100-listed firm, which earlier this week agreed to sell its US K12 courseware business to Nexus Capital Management for US$250mln as it shifts its focus from textbooks to digital education courses, reported an 8% rise in adjusted operating profit for the year to 31 December 2018 to £546mln.

READ: Pearson to sell US K12 courseware business for US$250mln in focus shift to digital education

The profit rise came despite the company seeing its total underlying revenue fall by 1% year on year, with declines in US Higher Education Courseware of 5% and in US K12 Courseware largely offset by the rest of the business growing in aggregate at over 1%.

The numbers provided few surprises as the group had already given a comprehensive trading update in January, providing a tight range for its 2018 profit and its 2019 outlook.

However, closing net debt of £143mln as at 31 December 2018, down from £432mln at the same stage a year earlier was positive.

John Fallon, Pearson’s chief executive said: "We made good progress last year. We increased underlying profits, outperformed our cost savings plan and invested in the digital platforms that are making us a simpler, more efficient and innovative company.

He added: “We have a lot still to do, but we expect company-wide sales to stabilise this year, and grow again in 2020 and beyond."

The firm proposed a final dividend of 13p per share, up from 12p a year earlier, taking the total pay-out for 2018 to 18.5p from 17p in 2017.

Pips squeezed

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown commented: “Pearson has been experiencing problems for a while - a trend towards cheaper study materials and digital resources has left the group in a tough spot. That means sales have been flat-lining, so it’s come as a nice surprise to hear it expects performance to improve from here.”

She added: “Pearson has historically relied too heavily on cost savings to keep itself going - it should be applauded for squeezing out such savings, but at some point the juice has to run out and sales growth needs to takeover.”

By late morning, Pearson shares had given back early gains to trade flat at 883.40p.

 -- Adds analyst comment, updates share price --

OzAurum to start drilling at Boca Rica Lithium Project

OzAurum Resources Ltd (ASX:OZM) CEO and managing director Andrew Pumphrey sits down with Proactive’s Jonathan Jackson to discuss an upcoming drilling program at Boca Rica Lithium Project in Brazil, following the identification of a spodumene zone. The company plans to start drilling in the next...

3 hours, 41 minutes ago