- Pearson expects full-year adjusted operating profit of £570m to £575m
- It is also assumed that sales growth will be at the upper end of the forecast range
- The company’s chief executive, Andy Bird, will be replaced by Omar Abbosh in 2024
Pearson has raised its annual profit outlook due to continued high demand for English courses.
The educational publisher now expects to report full-year adjusted operating profit of between £570m and £575m, up £20m from its previous forecast.
Additionally, the FTSE 100 group expects revenue growth, excluding the online program management and strategic review business, to be at the upper end of the low to mid-single digit range.
Forecast: Education publisher Pearson now expects to report full-year adjusted operating profit of between £570m and £575m, up £20m from its previous forecast
Total underlying revenue increased 2 percent in the third quarter, driven in part by increasing orders for the company’s computer-based English language tests in most markets, particularly India and Australia.
The company also reported strong performance in its assessment and qualifications division, its largest by revenue, driven by contract increases in its Pearson VUE Test Centers division.
Since acquiring workforce assessment firm PDRI in March, Pearson has received contracts from several U.S. government agencies, including the U.S. Air Force, the Drug Enforcement Administration and the Department of Homeland Security.
Still, the group’s virtual learning division saw a 29 percent drop in revenue following the end of a major contract with Arizona State University, while its business was also hit by the divestment of its various local course software operations.
However, outgoing chief executive Andy Bird said the company’s performance “demonstrates the continued momentum in our businesses”, adding that Pearson was “well placed for the next phase of growth and development and ready to capitalize on long-term future opportunities.”‘
Pearson announced that Bird will step down on Jan. 8 but will remain a board member through March to “ensure a smooth transition.”
Bird joined the company three years ago during a particularly turbulent time, when pandemic-related restrictions impacted textbook orders and in-person exams.
The former Disney International boss has sought to shift the group’s focus toward providing digital educational resources and training services.
He oversaw the launch and launch of the Pearson+ college learning app, which provides users access to an extensive library of e-books and learning tools.
But Bird also faced backlash from investors over his pay, even before he took up the role, when he was awarded an annual package of up to £5.9 million and a “golden hello” worth £7 million.
His successor, former Microsoft executive Omer Abbosh, has also been under scrutiny since it was announced last month that he would receive a £13m welcome bonus.
Sophie Lund-Yates, senior equity analyst at Hargreaves Lansdown, said Pearson had “put in a huge amount of work to improve its digital offering and reduce exposure to the declining physical courseware sector.”
“The biggest question now is where meaningful growth will materialize – if the new CEO is left with a company in a much better state and with the legwork now complete, making a mark could be a tougher task.”
Pearson shares rose 2.6 percent to 943.2 pence just before midday on Monday, making them the third-highest gain on the London blue-chip index.