Pearson warns on profit as Covid-19 closes test centres
The publisher said it has seen an increase in digital learning.
Publisher Pearson has warned that its profit will take a hit as tests and academic years are cancelled around the world to limit the spread of coronavirus.
The academic publisher said that cancellations in the UK, US and South Africa meant that most of its test centres have closed until the middle of April.
As a result, operating profit is now forecast to be between £25 million to £35 million lower than previously expected.
“Uncertainty in our businesses that rely on learners and staff being able to access physical sites… which will have a negative impact on Pearson profits,” the company said in a statement.
It added that its English franchise business in Brazil could take a blow as well if the crisis broadens.
In the US, Pearson expects a £15 million hit to operating profit as several states decided to postpone or waive testing this academic year.
But the business warned that this figure could grow as more states may follow suit.
It cancelled plans to return money to investors by buying its own shares.
“As we manage the impact of the Covid-19 pandemic on our business, and with the likelihood of prolonged uncertainty, the Pearson board has decided it is prudent to pause our share buyback,” it said in a statement.
However, as students stay at home to revise, Pearson is already seeing a big jump in the use of its digital products and services.
In time, the publisher said, this will boost the shift to online learning.
Pearson has been investing in this shift in recent years, as students move away from its traditional coursebooks.
Last year the company lost 12% of its sales in the all-important US higher education market. Sales of physical books dropped by almost a third in the same period, while digital showed only “modest” growth, Pearson revealed earlier this year.
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