AndrewLONDON. — British education publisher Pearson said its balance sheet was strong enough to pay a dividend despite first-quarter revenue falling 5 percent after the coronavirus pandemic forced schools and colleges to close.
The company said it had not laid off staff, choosing instead to switch them to digital products, where it has seen demand jump as teachers, students and parents turn to online learning during the crisis.
Chief executive John Fallon said Pearson had a responsibility to all stakeholders, including shareholders. The company is paying a final dividend of 13,5 pence for 2019, an increase of 4 percent.
“Our shareholders are ultimately pensioners, they rely on the dividend to support their standard of living,” he said.
“At times like these when many companies aren’t in a position to pay it’s even more important that companies like Pearson, that do have that balance sheet strength, do pay that dividend.”
Even before the pandemic, the company had been shifting resources into digital education in a search for growth as sales of expensive textbooks to US college students rapidly decline.
Fallon, who has taken a 25 percent temporary pay cut, said Covid-19 would accelerate the move online.
“When the threat of the pandemic eventually eases, it will be even clearer that the future of learning is increasingly digital,” he added.
‘Significant Goodwill’
Pearson’s balance sheet has been boosted by US$675 million of proceeds from the sale of its remaining stake in publisher Penguin-Random House. It said it had identified another £50 million of cost savings to be made in 2021.
Fallon said more than 1 000 staff had been redeployed to support the areas of greatest need, for example in making digital learning tools, services and resources available to teachers, students and parents.
It has supplied free digital products, such as a online maths tuition, worth £25 million, he added.
Its shares, which have declined 29 percent since the start of the year, were trading down 3 percent at 437 pence in morning deals.
Analysts at Citi said the 5 percent decline in first quarter underlying revenue was “not inspiring” but “not out of whack with expectations”.
“The group has moved countless educational resources online — many of which for free — to help students impacted by school/university closures,” they said.
“That the company is doing this while not laying off staff, we think will build significant goodwill for when COVID-19 disruption has passed.” — Reuters.
Online Reporter