Pearson sees 2% underlying sales growth and revenue rise at PRH

Pearson sees 2% underlying sales growth and revenue rise at PRH

Pearson has announced it is still on course to stabilise this year and grow in 2020 as it announced underlying sales growth for the first time in six years, up 2% for the first half of 2019. Meanwhile, the firm also saw an uptick in profits from its stake in Penguin Random House.

The company's headline sales figures fell by 2% from £1.87m in the first half of 2018 to £1.82m for the six months to June 30th 2019. However, the firm said when portfolio changes like the disposal of its K2 courseware business and currency movements were stripped out, revenue was up 2% in underlying terms, rising in its three main segments by 1% in North America, 6% in Core and 2% in Growth.

Adjusted operating profit of £144m was up 30% from £107m thanks partly to sales growth and savings from Pearson's ongoing transformation plan from print to digital.

C.e.o. John Fallon told reporters this morning the set of results were important, showing his company was finally moving from a period of "renewal and recovery to sustained growth". 

The results also revealed adjusted operating profits were up at PRH, where the education firm still has a 25% stake, from £22m during the same period last year to £25m.

PRH "performed in line with our expectations" seeing print and audio sales contributing to revenue growth rise on an underlying basis, though that was slightly offset by lower e-book sales. Books from by Michelle Obama, Delia Owen, Tara Westover, E L James, Jeff Kinney and Dr Seuss were singled out for credit.

The firm is also still on track to deliver more than £330m in cost savings by the end of the year, with around 1,500 jobs expected to go overall.

Overall the firm said its structural growth opportunities and stabilisation elsewhere "more than offset" declines in the US higher education courseware and student assessment markets which continue to be challenged. 

Its report stated: "Our guidance for 2019 adjusted operating profit remains unchanged and we continue to expect to deliver adjusted operating profit of between £590m to £640m.

"We continue to expect to stabilise revenue in 2019 and to return to top line growth in 2020. Our guidance for US Higher Education Courseware remains unchanged with net sales expected to be flat to down 5% for the full year, driven by ongoing underlying market pressures."

There was particularly strong performance in its Online Program Management and Connections Academy, and a "ramp-up of contracts" in its professional certification business. A recent contract to contribute to the overhaul of the exam system in Turkey is also expected to bear fruit.

Pearson also highlighted recent innovations as poiniting towards further growth for the company, including the acceleration of its transformation with the recent announcment its US courseware would now be released on a digital first basis. The company is also expecting Aida, its first AI-enabled maths tutor, to make an impact.

Fallon said: “We've had a good first half, with underlying growth across all divisions, as we start to benefit from accelerating our shift to digital. We are on track to at least stabilise revenue this year and return the company to top line growth from 2020. We are excited by the new digital products and platforms we're now launching, and our ability to help millions more people prepare for, develop in, and change careers through a lifetime of learning."