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Pearson lifts profit outlook on strong sales

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Pearson lifts profit outlook on strong sales
Pearson is being buoyed by increases in education enrolments. Photo: Getty

Pearson (PSON.L) said its sale growth for the last quarter of 2021 exceeded expectations in part thanks to strong performance of its assessment and qualifications unit, its largest business, as it raised its profit outlook. Shares in the publishing and education company were up about 6% on Wednesday morning.

“Led by a strong management team, we are repositioning the business, driving digital innovation and an increased focus on the consumer through the launch of Pearson+,” a new digital learning service, said CEO Andy Bird.

“We are well placed to build on this momentum in the year ahead and look to the future with confidence.”

Full year group sales were up 8% and adjusted operating profit expected of roughly £385m ($524m) was up about 33% compared to last year and ahead of expectations.

Sales in assessment & qualifications were up 18% driven by the strength of Professional Certification (VUE), Clinical Assessment and US Student Assessment, following a recovery from COVID-19.

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VUE test volumes grew 30% to 16.8 million due to this recovery, plus new client launches and growth in existing programs. Volumes in OnVUE, Pearson’s online proctoring service, grew 46%, reflecting continuing demand for remote testing.

In Q4, sales were up 2% as growth in US Student Assessment was partially offset by expected declines in VUE, due to strong comparators from a COVID-19 catch up in Q4 2020.

Pearson's stock was up on Wednesday morning. Chart: Yahoo Finance UK
Pearson's stock was up on Wednesday morning. Chart: Yahoo Finance UK

Sales in workforce skills grew 6% while sales in English language learning grew 17% for the full year due to a COVID-19 recovery in both international courseware and Pearson Test of English, where volumes grew 25% compared to 2020.

Sophie Lund-Yates, senior equity analyst at Hargreaves Lansdown, told Yahoo Finance UK: “Pearson’s results clearly show it’s moving in the right direction, especially where its digital services are considered."

She said challenges posed by the pandemic allowed the education specialist to regroup and refocus, and to its credit that strategy is showing through.

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The group is also being buoyed by increases in education enrolments, which is likely to reflect the changes to people’s attitudes throughout lockdowns.

"An increase of adults deciding to retrain or go back to university falls right into Pearson’s hands," she said, adding "operationally, as the digital Pearson+ proposition grows in popularity, its software-based model means margins should, in theory come for the ride.

"The untapped market here is huge, but it’s very early days.”

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