REG - Pearson PLC - Pearson 2023 Q1 Trading Update

PearsonAnnouncement

28/04/2023 07:00

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RNS Number : 7818X  Pearson PLC  28 April 2023

Pearson 2023 Q1 Trading Update (Unaudited)

 28(th) April 2023  Pearson delivered another quarter of strong performance, reinforcing business
                    momentum and strategic progress

Highlights

 ·         Underlying sales growth excluding OPM(1) and Strategic Review(2) of 6%.
 ·         Performance in each of Pearson's divisions in line with or ahead of our
           expectations.
 ·         Strong progress executing our strategic priorities, including further
           portfolio reshaping with the sale of OPM and completion of PDRI acquisition.
 ·         On track for delivery of £120m of cost efficiencies this year.
 ·         Remain on track to achieve our 2023 guidance.
 ·         Intention to commence a buyback to repurchase £300m of shares in the second
           half of 2023.

 

 Andy Bird, Pearson's Chief Executive, said:

 "Pearson has had a strong start to the year with results ahead of our
 expectations. This ongoing momentum is testament to our increasingly
 interconnected, consumer-focused, and innovative approach alongside relentless
 commercial execution. We delivered double-digit sales growth in our enterprise
 facing businesses, reflecting our strategy to address the upskilling and
 reskilling opportunity around the world. With our new talent investment
 platform on track to be launched later this year, this progress reinforces our
 belief that partnerships with enterprises will be a strong driver of future
 growth. Our continuing outperformance and the proven resilience of our
 business underpins our confidence of delivering on our financial expectations
 for the full year and over the medium term."

 

Underlying sales growth of 6%, excluding OPM(1) and Strategic Review(2); 2% in
aggregate

 ·         Assessment & Qualifications sales grew 6% driven by strong growth in
           Pearson VUE. This was due to the strength of Pearson VUE volumes, particularly
           in the nursing and IT certification sectors. Our extensive breadth of testing
           options, strong market position, and high quality delivery of licensure and
           certification exams, will continue to be a key driver of our performance going
           forward.
 ·         Virtual Learning sales decreased 14%, driven by an expected 35% decrease in
           OPM(1). Virtual Schools declined 2%, supported by good retention rates and the
           return of a school that had previously left, offset by enrolment declines for
           the 2022/23 academic year and lower district partnership renewals.
 ·         English Language Learning sales increased 66%. As expected, the strong growth
           is primarily due to an outstanding contribution from Pearson Test of
           English due to an improvement in global mobility versus the same period last
           year as well as increased market share in India and a temporary increase in
           skilled visa allocations in Australia. We also saw a strong performance in
           our Institutional business.
 ·         Workforce Skills sales grew 8%, driven by double-digit growth in Workforce
           Solutions, and continued growth in Vocational Qualifications. Sales are
           expected to build throughout the year, supported by the launch of the talent
           investment platform later this year.
 ·         Higher Education sales were down 5%, as expected, including the anticipated
           deferral of Pearson+ sales into Q2 this year due to a revenue recognition
           shift.
 ·         Sales in businesses under Strategic Review(2) decreased 50% as expected.

 

Strong execution across strategic initiatives

 ·         Completed acquisition of PDRI, significantly expanding Pearson's services to
           U.S. federal government. This acquisition unlocks synergies between Pearson
           and PDRI, whilst also expanding Pearson VUE's reach in a key strategic area.
 ·         Agreement to dispose of OPM business, further focusing Pearson's portfolio
           towards future growth opportunities.
 ·         On track to deliver £120m of cost efficiencies in 2023.
 ·         In February, Pearson's PTE language test received approval for Canadian
           Economic Immigration.
 ·         Pearson+ continues to show strong performance of paid subscriptions this
           Spring semester, growing threefold versus Spring 2022.
 ·         After the successful beta test of our Channels service in Pearson+, we began a
           targeted pricing test in April. We now have 18 academic channels and we
           recently introduced tech and soft skills classes, further enhancing Pearson's
           focus on learning for work.

 

Strong financial position

 ·         Pearson's financial position remains robust, with low net debt and strong
           liquidity.

 

Share buyback

 ·         Intention to commence a buyback to repurchase £300m of shares in the second
           half of 2023.

Financial summary

                                            Underlying growth
 Sales
 Assessment & Qualifications                6%
 Virtual Learning(1)                         (14%)
 English Language Learning                  66%
 Workforce Skills                           8%
 Higher Education                            (5)%
 Strategic Review(2)                         (50)%
 Total                                      2%
 Total, excluding OPM and Strategic Review  6%

Throughout this announcement growth rates are stated on an underlying basis
unless otherwise stated. Underlying growth rates exclude currency movements
and portfolio changes.

1 We have entered into an agreement to sell the OPM business. As is usual
practice, it will continue to be reported as part of Virtual Learning until
the sale has been completed.

2 Strategic Review is revenues in international courseware local publishing
businesses being wound down, which will continue to be reported separately
until dissipated.

Executive Appointments

 ·         Pearson today announced the appointment of Tony Prentice as Chief Product
           Officer and Co-President of Direct to Consumer. Tony brings to the role more
           than 25 years of experience in consumer-led product management including at
           companies such as SEMA4, American Express, GE, Starbucks and McKinsey.

This announcement contains inside information.

Contacts

 Investor Relations  Jo Russell          +44 (0) 7785 451 266

                     James Caddy         +44 (0) 7825 948 218

                     Gemma Terry         +44 (0) 7841 363 216

                     Brennan Matthews    +1 (332) 238-8785

 Teneo               Charles Armitstead   +44 (0) 7703 330 269

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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