Pearson said it ended last year ahead of its original expectations after a rise in sales and profits, as a digital turnround shows signs of bearing fruit despite the continuing long-term decline in its higher education business.
The group was among the best performing FTSE 100 stocks in 2022 and its share price has risen 48 per cent over the past 12 months.
Pearson estimated on Wednesday that group underlying sales for 2022 had risen 5 per cent year on year, in line with analysts’ expectations, but with adjusted operating profit increasing 11 per cent on an underlying basis to around £455mn, which was ahead of forecasts.
Since taking over in 2020, chief executive Andy Bird has shifted the group’s focus away from a dwindling textbooks business towards a company that provides digital services to students and also serves the workplace training market, following a turbulent decade marred by profit warnings.
“Pearson has completed the year ahead of our original expectations,” said Bird, adding that the company was well positioned to take advantage of “the continued need for upskilling and reskilling”.
Thomas Singlehurst, an analyst at Citi, said the interim results showed the company had managed to get itself into “a comfortable position” after a chaotic few years.
“For years, Pearson has aspired to put out a set of results where people say, ‘wow that was boring’,” he said. “I would say job done.”
Innovations include Pearson+, a platform launched in 2021 offering students access to a library of Pearson textbooks for $14.99 a month. The company has also made a string of vocational training acquisitions, including Faethm, a tech-driven platform for assessing workplace skills needs, as well as trimming costs.
Pearson shares were up 2.2 per cent in afternoon trading.
Sales rose 8 per cent in Pearson’s legacy qualifications business, which operates assessment centres worldwide, and there was 24 per cent growth in its English language learning division. Pearson+ ended the year with 2.83mn registered users.
Shore Capital said the update was “solid”, but analysts broadly said Pearson would need to build on this performance to match its CEO’s promise of becoming a “growth stock”.
“They’re steadying the ship but what do they do from here?” Singlehurst added.