Pearson weighed down as university students avoid printed course books

Printed university course books continue to weigh on publisher Pearson as students are turning ever more to digital alternatives.

The company’s US higher education courseware business lost 12% of its sales in 2019, it said, meaning overall sales fell to under £3.9 billion, from £4.1 billion a year earlier. On an underlying basis, sales remained flat.

Pearson has long toiled with its suffering university books unit as students turn away from printed books.

Sales of physical books declined 30%, with the growth of digital products only making up for it slightly with “modest” growth. Half of all learners now prefer eBooks, the company said.

However, chief executive John Fallon was positive about what the future might bring, promising a “exciting pipeline” of new products and services.

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“The future of learning will be increasingly digital and we have built, by revenue, by far the world’s leading digital learning company,” he said.

The business is still heavily reliant on North America, which accounted for 65% of its sales and 62% of adjusted operating profit in 2019.

Pearson’s operating profit was £275 million, a halving from the year before when it felt the benefit of selling parts of its business. On an adjusted basis operating profit rose 6%.

Pearson said 36% of revenue now comes from digital, an increase of 2% points since last year. A further 30%, which is another 2% point increase, is from digitally enabled products, while non-digital fell by 4% points to 34%.

The business, which sold its 25% stake in Penguin Random House for 675 million US dollars (£523 million), said it has completed £79 million of a £350 million share buyback announced at the time.

It also promised that full-year dividend will be raised by 1p to 19.5p.

This year bosses expect to see an adjusted operating profit of between £410 million and £490 million, not including the Penguin Random House stake.

“With 76% of the company already growing strongly, and all parts of Pearson profitable, we are a simpler and more efficient company, completely focused on empowering people to progress through a lifetime of learning,” Mr Fallon said.