Pearson 2024 Q1 Trading Update (Unaudited)
26 Avril 2024 - 8:39AM
Business Wire
Pearson is on track to achieve 2024 guidance with expected Q1
result and growth momentum for the second half
Highlights
- Underlying sales growth excluding OPM1 and Strategic Review2
of 3%.
- Strong operational progress in all divisions and continued
execution momentum across our 2024 strategic priorities.
- Continuing to infuse our products with AI and on-track to
include AI features in more than 40 Higher Education titles for the
Fall semester.
- Initial £300m share buyback completed; the previously
announced £200m buyback extension has commenced.
Omar Abbosh, Pearson’s Chief Executive, said: “The year
has started well. Financial performance was in line with our
expectations, thanks to strong execution across the business, and
we maintain a sharp focus on delivering against the priorities that
I outlined. The year is unfolding as we anticipated, and we
continue to expect an acceleration of growth in the second half,
which will see us achieve our guidance for the full year. We look
forward to providing an update on our strategic progress with our
half year results in July.”
Underlying sales growth of 3%, excluding OPM1 and Strategic
Review2; 2% in aggregate
- Assessment & Qualifications sales grew 2% after a
particularly strong prior-year performance. VUE, UK &
International Qualifications, and Clinical Assessment all
contributed to growth. US Student Assessment was impacted by
reduced scope, and phasing of some contracts which will normalise
in the second half. Pearson VUE won several new contracts,
supporting pipeline growth, including university entrance tests in
the UK and the teacher licence contract in Georgia. We also renewed
two key contracts with the Project Management Institute and the
American Registry of Radiologic Technologists. Clinical Assessment
saw solid trends and has several product launches planned for the
second half. UK & International Qualifications secured a
contract with the UK Government for England’s national curriculum
assessment tests.
- Virtual Schools sales increased 4%, due to the timing of
funding upsides, which is expected to dissipate in Q2. We will be
opening another virtual school in Missouri, in addition to those
previously announced as secured in Pennsylvania and California. We
are also on-track to open 19 additional Career Programmes this
year. Virtual Learning sales decreased 4%. As a reminder, this
included the previously announced OPM ASU contract loss, which
benefited sales through the first half of 2023.
- Higher Education sales were down 4%, in line with our phasing
guidance. Digital registrations increased 3% versus the prior year,
and we are pleased with the engagement we are seeing from both
students and faculty on our AI study tools. We remain on-track to
add this AI feature to more than 40 new titles for the key Fall
sales season, which, along with our partnership with Forage, is
supporting an improvement in our takeaway wins.
- English Language Learning sales increased 22%, with
inflationary pricing in Argentina having a positive impact which
will dissipate through the year as comparative FX rates normalise3.
Excluding this, sales increased high single digits, in line with
full year expectations. Institutional delivered a very strong
quarter. Pearson Test of English declined slightly due to a strong
comparator, and we expect performance will ramp through the
year.
- Workforce Skills sales grew 9%, in line with our expectations,
with growth of 13% in Workforce Solutions. Vishaal Gupta joined
Pearson on April 15th to lead the division.
On track to achieve 2024 guidance
- Expect growth momentum in the second half of 2024 with the
growth of Higher Education and normalised comparators for the
assessments businesses.
- In Assessment & Qualifications, we continue to expect low
to mid-single digit sales growth for the year, with sales growth
weighted to H2.
- In Virtual Schools, we continue to expect sales to decline at a
similar rate to 2023, given the previously cited loss of a larger
partner school for the 2024/25 academic year. As a reminder, there
was a weighting of sales to Q1 from Q2 due to the timing of state
funding. We expect to return to growth in 2025.
- In Higher Education, we remain confident we will return to
growth in the second half and for the full year. We continue to
expect H1 to mirror H2 2023 before the return to growth.
- In English Language Learning, we continue to expect high single
digit sales growth with growth weighted to the second half given
the outstanding performance in the first half of 2023.
- In Workforce Skills, we continue to expect to achieve high
single digit sales growth.
Strong financial position
- Pearson’s financial position remains robust, with low leverage
and strong liquidity.
- Moody’s improved its outlook for Pearson from Baa3 Stable to
Baa3 Positive outlook.
Share buyback
- We completed the £300m share buyback programme that was
initiated last year and have since commenced the previously
announced £200m buyback extension with £88m purchased up to 24
April 2024.
Financial summary
Underlying growth
Sales
Assessment & Qualifications
2%
Virtual Learning
(4)%
Higher Education
(4)%
English Language Learning
22%
Workforce Skills
9%
Strategic Review2
(100)%
Total
2%
Total, excluding OPM1 and Strategic
Review2
3%
Throughout this announcement growth rates are stated on an
underlying basis unless otherwise stated. Underlying growth rates
exclude currency movements and portfolio changes.
1 In 2023, we completed the sale of the POLS business and as
such have removed from underlying measures throughout. Within this
specific measure we exclude our entire OPM business (POLS and ASU)
to aid comparison to guidance. As expected, there are no sales in
the OPM business in 2024.
2 Strategic Review is revenues in international courseware local
publishing businesses which have been wound down. As expected,
there are no sales in these businesses in 2024.
3 In the second half of 2023, the Argentinian peso devalued
significantly to the pound sterling. Pearson instituted
inflationary pricing, primarily in English Language Learning, to
offset this impact. As we annualise the devaluation in the
Argentinian peso the inflationary pricing benefit will reduce in
GBP terms.
Notes
Forward looking statements: Except for the historical
information contained herein, the matters discussed in this
statement include forward-looking statements. In particular, all
statements that express forecasts, expectations and projections
with respect to future matters, including trends in results of
operations, margins, growth rates, overall market trends, the
impact of interest or exchange rates, the availability of
financing, anticipated cost savings and synergies and the execution
of Pearson’s strategy, are forward-looking statements. By their
nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that will
occur in future. They are based on numerous assumptions regarding
Pearson’s present and future business strategies and the
environment in which it will operate in the future. There are a
number of factors which could cause actual results and developments
to differ materially from those expressed or implied by these
forward-looking statements, including a number of factors outside
Pearson’s control. These include international, national and local
conditions, as well as competition. They also include other risks
detailed from time to time in Pearson’s publicly-filed documents
and you are advised to read, in particular, the risk factors set
out in Pearson’s latest annual report and accounts, which can be
found on its website (www.pearsonplc.com). Any forward-looking
statements speak only as of the date they are made, and Pearson
gives no undertaking to update forward-looking statements to
reflect any changes in its expectations with regard thereto or any
changes to events, conditions or circumstances on which any such
statement is based. Readers are cautioned not to place undue
reliance on such forward-looking statements.
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Investor Relations Jo Russell +44 (0) 7785 451 266 Gemma
Terry +44 (0) 7841 363 216 Brennan Matthews +1 (332) 238-8785
Media Teneo: Ed Cropley +44 (0) 7492 949 346 Pearson:
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