Pearson shares hit 11-year low after finance chief quits
The company expects print declines to continue in 2020.
Pearson will see a full-scale change in its top management team after finance director Coram Williams said he would follow chief executive John Fallon out of the door.
Shares fell to a decade-low on the news and predictions that profit will fall in 2020, even as the company met its own guidance.
Adjusted operating profit was flat in 2019 at around £590 million, but will reduce to between £500 million and £590 million in the current financial year, according to the company’s predictions.
The value of a share in Pearson fell as low as 535.2p shortly after opening. It later recovered somewhat to 776.2p, or 6.8% down on the day. It marks the lowest point for the company’s shares since October 2008.
I've loved my time working here, and I am proud of the progress the company has made over the last few years Coram Williams
The business was hit by news from the US where its range aimed at the higher education sector declined by 12%. That segment is 24% of Pearson’s overall revenue.
“The struggling US Higher Education business has once again blotted Pearson’s copybook,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
He added: “John Fallon correctly predicted the dramatic decline in print course materials and has been working hard to shift the group to a more digital set-up. Unfortunately that’s easier said than done, and customers just don’t seem willing to fork out for digital what they once spent on print.”
The trend is set to continue in 2020 as heavy declines in print are only “partially offset by modest growth in digital”, the company said.
Pearson said that digital sales in US higher education now account for 63% of its revenue, up from 55% in 2018.
Mr William’s decision to leave comes just a month since Mr Fallon said he will retire once the board can find someone to succeed him.
The finance director will take up a “comparable role at a company based in Continental Europe,” the company said in a statement, without elaborating further.
“I’ve loved my time working here, and I am proud of the progress the company has made over the last few years,” Mr Williams said.
His deputy of two years, Sally Johnson, will step into his shoes.
The Oxford graduate joined Pearson in 2000 at Penguin, which was then owned by the company. She has been in charge of financial planning and tax, among other things, since 2017.
Mr Williams added: “I am now looking forward to ensuring a seamless transition to my successor, Sally Johnson, and I am confident of Sally’s ability to lead Pearson through the next phase.”