Pearson expects sales to return to growth next year

Pearson said it expects sales to stabilise this year and return to growth in 2020 as it reported an 18% increase profits on lower costs.

The publishing company made a pre-tax profit of £498 million last year compared with £421 million in 2017 as reduced costs were offset by challenges in its US higher education business.

Revenue fell to £4.13 billion from £4.51 billion due to weakness in the US business, which has seen sales fall as students are increasingly buying second-hand and digital textbooks.

Chief executive John Fallon acknowledged that there is still work to do but is optimistic that sales will grow next year.

“We made good progress last year. We increased underlying profits, outperformed our cost savings plan and invested in the digital platforms that are making us a simpler, more efficient and innovative company,” he said.

“We are increasingly well placed to guide our customers through a lifetime of learning and help our partners shape the future of education.

“We have a lot still to do, but we expect company-wide sales to stabilise this year, and grow again in 2020 and beyond.”

Pearson job cuts
Pearson job cuts

The firm expects to report adjusted operating profit of between £590 million and £640 million for 2019.

Pearson is in the midst of a transformation programme and has been forced to cut jobs and sell assets including the Financial Times newspaper and The Economist magazine to focus on the education sector.

On Monday, the company said it has sold its K12 course materials business in the US to private equity firm Nexus Capital for 250 million US dollars (£193.5 million).

The deal will see Pearson bank an initial cash payment of 25 million US dollars (£19.3 million), with the remainder to be paid over seven years.

K12 employs approximately 1,330 people and generated around £364 million in revenue and £20 million in profits for the group last year.