New boss Bird launches bold Pearson overhaul
INVESTORS piled into Pearson as its chief executive started a new chapter for the education publishing powerhouse.
Former Disney chairman Andy Bird unveiled a bold and wideranging strategy to overhaul the company, which is scrambling to adapt to an age where textbooks are no longer the norm and people increasingly learn online.
Pearson has been grappling with this for several years and has racked up a string of profit warnings in the process.
But Bird’s arrival last autumn was intended to turbo charge these efforts after the pandemic disrupted virtually all in-person teaching at schools and businesses in its major markets.
His plan will reorganise the company into five divisions and offer more materials directly to learners, rather than relying on sales made through other organisations such as university.
This ‘direct to consumer’ approach places an emphasis on lifelong learning and workplace skills. The new plan will be pricey – costing between £40m and £70m in 2021. But Pearson’s 2020 numbers underlined the need for change, with sales falling 12pc to £34bn. Profits rose to £354m from £232m in 2019, but this was boosted by the sale of Pearson’s remaining stake in Penguin Random House. Sales of global online materials worldwide jumped by a fifth to £697m.
In early trading the company’s shares dropped, indicating the market perhaps wasn’t quite as convinced as Bird. But it staged a comeback throughout the day and finished up 6.4pc, or 48.8p, at 808.8p.
The wider FTSE 100 started the week up 1.3pc, or 88.61 points, at 6719.13, while the FTSE 250 rose 1.2pc, or 248.91 points, to 21210.22.
Travel and leisure firms were big winners, with conference organiser Informa rising 5.7pc, or 31.6p, to 586.6p, British Airways-owner IAG by 3pc, or 6.1p, to 210p, while Carnival added 8.2pc, or 125.5p, to 1656.5p, and Easyjet 3.8pc, or 36.7p, to 1012.5p.
Housebuilder Persimmon (up 5.8pc, or 168p, to 3074p) rose after Citigroup brokers increased the target price on its stock. JPMorgan and Peel Hunt also raised their targets on fellow builder Vistry (up 9.8pc, or 91p, to 1019p).
In addition to Pearson’s numbers, results season continued apace. Shipping services giant Clarkson swung to a £16.4m loss from a £200,000 profit after the pandemic hammered international trade and brought about the ‘most globally disruptive and challenging time in living memory’. Shares dropped 1.9pc, or 50p, to 2570p.
Aircraft parts maker Senior also posted a loss, but saw its stock rise 7.2pc, or 7.9p, to 117.9p. The group was hit by the doublewhammy of the Covid grounding flights worldwide and the crisis with Boeing’s 737 Max jets.
Direct Line’s backers failed to be roused by the insurer’s plans to launch a £100m share buy-back and a 2.1pc rise in its final dividend to 14.7p per share.
Covid and bad weather claims hit the insurer, knocking profits. It fell 1.8pc, or 5.9p, to 314.5p.
Aston Martin stalled despite pledging to make its electric cars in the UK. Shares fell 0.6pc, or 11p, to 1921p. The luxury car brand’s chief executive Lawrence Stroll promised to use local factories to make a battery-powered sports car and SUV.
On Aim, Sourcebio International (up 4pc, or 7.5p, to 197.5p) started the week with a big-name deal.
The lab services firm will provide Covid testing services to the England rugby squad and players and support staff at the 12 clubs in Premiership Rugby, the highest tier of club rugby in England.