Pearson 'on track' for growth with first quarter sales up 1%

Pearson 'on track' for growth with first quarter sales up 1%

Pearson has reported it is "on track" to return to underlying profit growth in 2018 after its revenue rose 1% in the first quarter.

Over the period, which is notably Pearson's shortest quarter, sales increased 1% in underlying terms, with 3% growth in North America and 6% in Core business, which includes the UK, Australia and Italy. Sales in its Growth segment, which includes Brazil, China, India and South Africa, were down 12%; despite good growth in China and in its Wizard English language schools in Brazil, it said this was offset by a decline in South Africa school courseware. Net debt is down 45% on last year.

Chief executive John Fallon called the first quarter results "a good start to 2018" with Pearson "performing in line with expectations". He added: "We continue to make good progress against our strategic priorities including our digital transformation and we expect to grow underlying profit in 2018."

Pearson said there had been good growth in its Online Program Management (OPM) business. Significantly it signed a new 10-year partnership with the University of Sussex and gained the approval of three new virtual public schools, supported by Pearson’s Connections Academy, in Florida, Michigan and Ohio. 

Of Penguin Random House, it reported the trade publisher was "trading is in line with our expectations". 

If Pearson does report a rise in profit in 2018, it will be for the first time in six years. The company delivered a string of profit warnings following challenges in the US education market, culminating in a £2.6bn pre-tax loss for 2016. 

Pearson pledged to reduce costs by £300m in May 2017 and by August 2017 had agreed the sale of its English test preparation business, Global Education (GEDU), to Puxin Education to generate $80m. It also made plans to slash another 3,000 jobs by 2020. In October Pearson completed the sale of a 22% stake in Penguin Random House to co-shareholder Bertelsmann. In November it agreed to sell its English language business Wall Street English (WSE) for $300m and by January 2018 Pearson said it had made "good progress". Total underlying revenues for 2017 declined 2%, led by a drop of 4% in its North American territory, with sales in US higher education courseware down 3%.