Pearson sales drop 10% in 'challenging' 2020

Pearson has reported group sales fell 10% in 2020 in its January trading update, reflecting the continuing impact of Covid.

With adjusted operating profit for the year expected to be in range of £310m-315m, the company said the impact of the pandemic was felt most acutely in its International and Global Assessment businesses, down in revenue 19% and 14% respectively, due to closures of test centres and schools and the cancellation of exams, as well as “reduced global mobility” and “international economic pressure on spending”.

However, it said the demand for digital learning had accelerated, resulting in a “strong” performance in its Global Online Learning business, up 18%, both from enrolments in new and existing schools in Virtual Schools and sales growth in Online Program Management (OPM).

Although North American Courseware declined 13% with US Higher Education Courseware revenue down 12%, Pearson reported “good growth” in digital registrations and e-books; at the end of 2020, over 70% of US Higher Education Courseware revenue was digital.

Pearson had the toughest time in the second quarter of the year, when the revenues in global assessment dropped 45%, but had returned to sales growth by the fourth quarter: down 5% for Q1, down 28% in Q2, and down 10% in Q3, but up 4% in Q4.

The trading impact of Covid-19 was partially offset by restructuring savings, with Pearson reporting incremental benefits during the year of £60m associated with its 2017-2019 restructuring plan while the company remains "on track" to create £50m in cost efficiencies in 2021.

Andy Bird, who took the helm as chief executive in October, said: "I am very proud of the way that our employees across the world have come together - in an incredibly challenging year - to support one another, our customers and the broader communities in which we operate. My priority remains keeping our employees and customers safe as global lockdowns and tighter restrictions persist.

"Despite facing significant uncertainty, our teams have been laser-focused on closing out 2020, enabling us to report sales and profit for 2020 in line with expectations. Uncertainty remains in the near term as a result of the ongoing pandemic, with further lockdowns, exam cancellations and reduced global mobility. However, I am excited about our future given the shift to online learning and the huge opportunity to help more people develop the skills they need.

"At the end of 2020, we made several key hires to accelerate our digital growth and, looking ahead, we start the year with momentum, pace and confidence. Our broader goal is to become a more consumer-focused company, targeting the incredible opportunity that exists to have a direct relationship with millions of lifelong learners."

The company will share further details of its full-year results in March in its preliminary results.