REG - Pearson PLC - Pearson 2024 Q1 Trading Update

PearsonAnnouncement

26/04/2024 07:00

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RNS Number : 1195M  Pearson PLC  26 April 2024

Pearson 2024 Q1 Trading Update (Unaudited)
 26(th) April 2024  Pearson is on track to achieve 2024 guidance with expected Q1 result and
                    growth momentum for the second half

Highlights
 ·         Underlying sales growth excluding OPM(1) and Strategic Review(2) 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 OPM(1) and Strategic Review(2); 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 normalise(3). 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 Review(2)                               (100)%
 Total                                            2%
 Total, excluding OPM(1) and Strategic Review(2)  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.

Contacts
 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

                     Laura Ewart        +44 (0) 7798 846 805

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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