Pearson to hit profit expectations despite shut Australian immigration centres

Education publisher Pearson’s international business has remained one of its worst hit areas by the Covid-19 pandemic as Australian immigration test centres stayed closed, but it will still hit profit expectations for last year.

The company said that international sales had dropped 19% across 2020, amid a wider fall.

The closure of immigration and test centres in Australia meant that the number of the company’s PTE English language tests being taken dropped by 36% compared to 2019.

The Covid-19 pandemic also weighed on purchases of courseware internationally, the business said.

Overall, the business said that revenue is expected to have dropped 10% to £3.5 billion when it reports full-year figures in March.

But Pearson’s digital platforms, which it has been investing in for several years, saw a boost amid lockdown. Global online sales rose by 18% year-on-year.

“This morning’s release summarises a challenging year during which the Covid-19 pandemic has driven a polarisation in the performance of its operations,” said Roddy Davidson, an analyst at Shore Capital Markets.

Pearson said that it expects to deliver another £50 million in cost efficiencies during the current year, adding to the £60 million of benefits from 2020.

It expects to make an adjusted operating profit in the range of £310 million to £315 million.

“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,” said Andy Bird during his first trading update as the company’s chief executive.

“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.”

Shares rose about 7% in the first hour of trading in London after the update.

Mr Bird added: “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.”