Yahoo Finance Pearson hails shift to digital tech as it returns to the black
Education publisher Pearson has hailed its investment in digital technology including online textbooks and AI-powered essay marking software after asset sales helped it claw its way back into the black in the first half of its financial year.
The FTSE 100 giant, which is in the middle of a turnaround aimed at moving away from its historical core of printed textbooks, made pre-tax profits of £202m in the six months to June, up from a £10m loss last year.
Its return to profit came thanks to £207m of gains from selling off businesses including its Wall Street English language teaching unit. Underlying adjusted operating profit, excluding M&A and other one-off factors, was also up, by 46pc.
John Fallon, chief executive, said the company was beginning to benefit from new technology such as online textbooks.
He added: “It’s good for Pearson as it gives us a more reliable earning stream through the move to a subscription model, instead of the same textbooks being used year-in, year-out.
“But it’s also good for students and faculty as they get more up-to-date materials, a much more engaging learning experience and much more immediate help and feedback, all at a lower price than a textbook.”
Revenues sank 10pc to £1.9bn because of the sell-offs, but rose 2pc on an underlying basis, ahead of expectations, sending Pearson’s shares up 3.7pc to 958p in noon trade. The stock has tanked in recent years as it has struggled to adjust to a shift towards digital media.
Analysts said the results showed Pearson’s turnaround was doing better than expected but pointed out that the bulk of its profits tend to come in the second half of the year as schools and colleges invest in new materials ahead of the autumn term.
Hargreaves Lansdown’s George Salmon said: “Pearson needs to prove itself capable of thriving in this brave new world of interactive education.
“These results will give some assurance on that front, but the bumper sales season doesn’t come until later in the year. That makes full-year results the more important test.”
