Pearson’s Share Price Rallied 5.44% on 2023 Preliminary Results

The Pearson plc (LON: PSON) share price rallied 5.44% after announcing its 2023 preliminary results. The report showcases a robust performance by the Group, with a notable 5% increase in underlying sales growth, once the impacts of OPM and the Strategic Review businesses are excluded.

A significant uptick was observed in the Group's adjusted operating profit, which soared to £573 million. This represents a 31% increase on an underlying basis compared to the previous year. Such a substantial rise is attributed to a combination of sales growth and the successful implementation of a cost-efficiency program valued at £120 million.

The program bolstered profitability and enhanced the adjusted operating profit margin from 11.9% to an impressive 15.6%, marking a period of remarkable financial efficiency and operational effectiveness.

The company demonstrated exceptional financial discipline, achieving an operating cash conversion rate of 102%. This efficiency in converting earnings into free cash flow contributed to a substantial 74% increase in headline free cash flow. 

Reflecting its strong financial position and commitment to shareholder returns, the company proposed a final dividend of 15.7p. This adjustment brings the total annual dividend to 22.7p, a 6% increase from the previous year.

In line with its clear capital allocation strategy, the company embarked on a £300 million share buyback program last September. Building on this momentum, it has now announced plans to augment this initiative with an additional £200 million share buyback program.

This decision highlights the company's confidence in its financial health and its dedication to providing consistent returns to its shareholders.

The company presents a positive outlook for 2024 and 2025, aligning with its existing expectations and guidance. It anticipates a further enhancement in free cash flow in the coming year, primarily due to the anticipated reduction in restructuring cash costs. 

This forward-looking statement reflects the company's confidence in its strategic direction, operational efficiency, and its ability to continue generating strong financial performance in the face of evolving market conditions.

Pearson share price. 

The Pearson share price rose 5.44% to trade at 1016.00p from Thursday’s closing price of 963.60p.