Education giant Pearson today said it will maintain its dividend for the full year as the firm unveiled plans to “significantly” reduce its office space.
The publisher proposed a final dividend of 13.5p, bringing its full-year payout to 19.5p — in line with 2019.
It came as Pearson announced plans to slim down its property portfolio, saying its offices would occupy a “significantly” smaller square footage.
It said the changes would result in a one-off cost of £140m but would lead to cost savings of roughly £20m per year in the coming years.
Shares in Pearson dropped more than three per cent in early trading.
Unveiling its full-year results today, Pearson remained bullish on its outlook despite the impact of a pandemic-induced sales slump.
The company posted a 10 per cent decline in underlying revenue over the year as school closures and exam cancellations took their toll.
While sales in its virtual learning division jumped by almost a fifth, this was offset by double-digit declines in its global assessments, international and North American courseware units.
Adjusted operating profit was £313m, almost half the £581m posted in the previous year.
Despite this, Pearson was upbeat about its outlook, forecasting year-on-year revenue growth as Covid lockdowns begin to ease around the world.
The company is also pursuing a strategy overhaul under new chief executive Andy Bird that will see it target a direct-to-consumer model similar to the one used by streaming giants such as Netflix.
Bird today said that three-quarters of Pearson’s sales were now digital, up from two-thirds in 2019.
“Despite the significant challenges of 2020, it is thanks to the tenacity and commitment of colleagues around the world that Pearson has delivered a solid financial performance,” Bird said in a statement.
“This year, as we recover from the impact of the pandemic, we are focused on delivering revenue and profit growth.”
Pearson today also outlined a restructuring of its business as the publisher, which traditionally relied on print sales of textbooks, looks to shift to a more digitally-focused model.
The group today said it will reorganise into five business divisions: virtual learning, higher education, English language learning, workforce skills and assessments and qualifications.
Each of these will be supported by a direct-to-consumer division aimed at bringing Pearson’s offerings straight to customers.
In addition to its school services, the company is hoping to tap into growing demand for training and qualifications within business.
Pearson already provides training schemes for tech giants such as Microsoft and Amazon Web Services.
Chief executive Bird today pointed to this as a significant growth opportunity, adding that “corporations are becoming the new universities”.
As part of its revamp, Pearson will also carry out a strategic review of its international courseware local publishing businesses, including in Canada.
“Net debt has more than halved in weight, relieving pressure and meaning Pearson has a stronger foundation from which to launch the corporate revamp,” said Sophie Lund-Yates, equity analyst at Hargreaves Landsdown.
“However, that’s not to say Pearson’s report card is a straight-A situation. A lot of revenue still relies on physical teaching, and Pearson’s long drawn out pivot to digital is far from over. It’s throwing a lot at turning its fortunes around, and while the ideas have merit, that’s a very different accolade to getting the job done on budget, and in time.”