Pearson says trends ‘improving’ in third quarter

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(Sharecast News) – Pearson reported an “improving” trend in its third quarter on Wednesday, with a strong performance in its Global Online Learning; North American Courseware and Global Assessment businesses in line with expectations, while its International operations were further impacted by Covid-19.

The FTSE 100 education publisher said that for the first nine months of the year, group sales declined by 14%, largely reflecting the continuing impact of Covid-19 and test centre and school closures in Global Assessment and International, and expected declines in North American Courseware.

In Global Online Learning, it said sales grew 14% due to 41% enrolment growth in virtual schools for the 2021 academic year, with strong sales growth in Online Program Management driven by undergraduate and international performance, partially offset by discontinued programmes.

Global Assessment sales declined 19% due to the impact of test centre closures in Professional Certification (Pearson VUE), the cancellation of spring testing in US Student Assessment, and school closures impacting Clinical Assessment.

North American Courseware declined 14%, with a stronger adoption performance in the autumn in US Higher Education Courseware, and “good growth” reported in digital and subscription take-up, leading to the faster decline of higher-priced package and print sales.

International declined 24% due to the impact of Covid-19, and as the associated economic effects intensified in several key markets, which the company said primarily affected public and private spending on courseware and assessments.

Pearson said it retained a “strong” balance sheet and “significant” financial headroom at period end.

The firm said the execution of its strategy was on track, with technology and platform development progressing “well”.

It reported a 41% increase in Virtual School enrolments for the 2021 academic year.

OPM course enrolments increased 17% excluding discontinued programmes, and declined 10% including discontinued programmes, with increased efficiencies in the student recruitment process and student acquisition costs following the operational changes made earlier in the year.

The company launched the Pearson Pathways digital marketplace during the period, which provides learners with recommendations for courses and credentials to help them achieve the skills they need.

Pearson said its ‘digital roadmap’ was on track with the launch of additional Revel titles, and 250 new e-text titles on the Pearson Learning Platform.

The firm said it had accelerated its shift to digital in US Higher Education Courseware, with digital registrations including ebooks up 9%, showing signs of secondary market recapture, while print and bundle units sold into US Higher Education colleges was down 32%.

After nine months, Pearson said it was on track to deliver an outturn “broadly in line” with market expectations.

However, because of the pandemic, larger-than-usual uncertainties surrounded the fourth quarter, particularly in International.

“Our digital performance is very strong, as we support customers and learners around the world as they shift to fully online and hybrid learning,” said chief executive officer John Fallon.

At 0910 BST, shares in Pearson were down 0.21% at 568.6p.

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