(Sharecast News) – Pearson said on Wednesday that its group sales in 2020 declined by 10%, with the company expecting to report adjusted operating profit of between £310m and £315m.
The FTSE 100 education publisher said that portfolio changes, inflation and the trading impact of Covid-19 were partially offset by restructuring savings.
It said the “challenging impact” of the pandemic had been felt most acutely across its international and global assessment units due to test centre and school closures, exam cancellations, reduced global mobility and international economic pressure on spending.
The Covid-19 crisis had accelerated demand for digital learning, with performance in the global online learning operation described as “strong”.
Pearson said US higher education courseware had performed in line with expectations, despite the pandemic.
The company’s global online learning sales grew 18% due to strong enrolments in new and existing schools in ‘Virtual Schools’, and good sales growth in online programme management (OPM), with growth in continuing programmes partially offset by discontinued programs.
Global assessment sales declined 14%, reflecting the impact of test centre closures during the lockdowns in the first half in professional certification, with pent-up demand in the second half partly moderated by fourth quarter lockdowns.
The cancellation of testing in the spring impacted US student assessment operations, and school closures impacted US clinical assessments.
North American courseware declined 13%, with US Higher Education Courseware revenue down 12%, although there was “good growth” in digital registrations and e-books, and a further decline of higher-priced package and print sales.
At the end of 2020, over 70% of US higher education courseware revenue was digital.
Pearson’s international division declined 19% due to school and test centre closures and the continuing impact of Covid-19 on public and private spending on courseware and assessments.
The company said it achieved incremental in-year benefits of £60m associated with the 2017-2019 restructuring plan, with the board saying it was “on track” to create the further £50m of cost efficiencies for the 2021 full-year.
It said it retained “significant” financial headroom with net debt of around £0.5bn, and immediately-available liquidity of about £1.9bn through committed facilities and cash balances.
“Despite facing significant uncertainty, our teams have been laser-focused on closing out 2020, enabling us to report sales and profit for 2020 in line with expectations,” said chief executive officer Andy Bird.
“Uncertainty remains in the near term as a result of the ongoing pandemic, with further lockdowns, exam cancellations and reduced global mobility.
“However, I am excited about our future given the shift to online learning and the huge opportunity to help more people develop the skills they need.”
Bird said that at the end of 2020, Pearson made “several key hires” to accelerate its digital growth and, looking ahead, the firm had started the year with “momentum, pace and confidence”.
“Our broader goal is to become a more consumer-focused company, targeting the incredible opportunity that exists to have a direct relationship with millions of lifelong learners.”
At 0846 GMT, shares in Pearson were up 6.19% at 721p.
