(Alliance News) - Pearson PLC on Friday reported improved profits and margins despite a dip in sales, as the company said it was on track to deliver growth in line with expectations for 2024.
Pearson is a London-based provider of digital and virtual learnings materials for both higher education institutions and professionals.
For 2023, the company delivered GBP3.67 billion in sales, down 4.3% from GBP3.84 billion in 2022.
The company's largest division, Assessment & Qualifications, saw an 8% improvement in sales, though this was offset by declines in Virtual Learning and Higher Education, down 25% and 4.8%, respectively.
Pretax profit, however, was up 53% to GBP493 million from GBP323 million.
Pearson said that its significantly improved margins were the result of a GBP120 million cost efficiency programme completed during the year, which supported an adjusted operating profit margin increase to 16% from 12%.
Adjusted earnings per share rose to 58.2p from 51.8p a year prior.
The company has proposed a final dividend of 15.7p, above 2022's 14.9p dividend, bringing the total amount returned to shareholders up to 22.7p from 21.5p in 2022.
Free cash flow rose 74% to GBP387 million from GBP222 million.
The company said that it has so far repurchased GBP288 million worth of shares at a price of 928p each as part of its GBP300 million share buyback programme, announced in February. As a result of its healthy free cash flow, however, Pearson said it intends to extend the buyback total to GBP500 million.
Looking ahead, Pearson said that sales and adjusted operating profit will be in line with current market expectations for 2024.
The company's most recent collated consensus has sales increasing 3.7% in 2024, with adjusted profit growing to GBP621 million from GBP573 million this past year.
The company expects the downturn in Virtual Learning sales to continue, but expects this division to return to growth beyond 2024.
The company also expects its Higher Education division to bounce back in 2024.
Chief Executive Omar Abbosh said: "2023 was another year of strong operational and financial performance, with results surpassing initial expectations once again, driven by our Assessment & Qualifications and English Language Learning businesses. Our consistently strong cash generation has sustained investment to support our future growth and deliver ongoing value for shareholders."
Shares in Pearson were up 4.0% at 998.61 pence each in London on Friday morning.
By Hugh Cameron, Alliance News reporter
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Pearson (PSON)