Pearson profits climb as exam timetables normalise and English language courses surge in popularity
- Britain’s largest education company reported first-half profits jumped to £131m
- Revenue growth was primarily driven by its assessment and qualifications arm
- Pearson has expanded its digital offering as sales of textbooks have declined
Pearson profits jumped in the first six months of 2022 amid a significant rebound in students sitting exams and huge demand for English language tests.
Britain’s largest education company reported first-half profits soared to £131million from just £18million, on the back of healthy sales growth across four of its five new global divisions.
Revenue growth was primarily driven by its assessment and qualifications arm as in-person exam activities returned to normality, contracts were gained in the United States, and the level of mental health appraisals exceeded forecasts.
Growth: Pearson reported first-half profits jumped to £131million from just £18million last year
This offset a decline in trade at its computer-based testing business VUE, following changes to a contract with the Drivers and Vehicle Standards Agency.
The division also reported adjusted operating profit of £137million, a year-on-year increase of around a third, helping the FTSE 100 group to amass a total underlying profit of £160million.
By comparison, the publisher’s English language course business still made a small loss of £4million even though the relaxation of travel restrictions produced a surge in people taking its tests.
Pearson shares were up 8.2 per cent to 818.6p during the mid-morning on Monday, making it the second-highest riser on the FTSE 100 Index.
For much of 2020 and early 2021, Pearson was financially affected by the mass closure of test centres and cancellation of examinations as governments sought to contain the Covid-19 virus.
On top of this, the pandemic accelerated the long-term decline in demand for its high-margin textbooks and towards online learning services, particularly in the US.
In response to this growing trend, the London-based firm has launched a series of strategies to enhance its digital offering, identify cost savings and restructure its portfolio, much of which was spearheaded by chief executive Andy Bird.
This has involved reorganising the business into five core divisions, such as virtual learning, higher education and workforce skills, which will be supported by its direct-to-consumer group.
Pearson has also sold or agreed the sale of numerous publishing businesses, such as its Italian and German K12 courseware divisions to Finnish media giant Sanoma Corporation, and Brazilian companies COC and Dom Bosco.
The group has bought Credly, the world’s biggest professional credential platform, and Mondly, a free language learning app that allows users to study a new language via virtual or augmented reality.
Chief executive Andy Bird said: ‘Pearson has 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 across their lifelong learning journeys.’
Thanks to the strong results, Pearson has upheld its annual guidance for the 2022 financial year, with analysts expecting adjusted operating earnings of £416million.