By Paul Sandle
LONDON (Reuters) -Education company Pearson (LON:PSON) said strong demand for its English language courses and a higher margin in its exams unit boosted profit and cash flow in 2023, enabling an additional 200 million pounds ($253 million) of share buy-backs.
The British company reported operating profit of 573 million pounds on Friday, in line with a forecast last month, and said it expected to meet expectations for another rise to around 621 million pounds this year.
CEO Omar Abbosh, who joined in January from Microsoft (NASDAQ:MSFT), called out strong performances in Assessments and Qualifications, where underlying profit rose 33% on sales up 7%, and English Language Learning.
Pearson was positioned for an inflection point in AI, he said. "The opportunities to use AI as a tool for better learning, while driving growth in our business, are immense."
He said an initial response from higher education students to its AI products had been extremely positive.
Pearson would also sharpen its focus on education in companies, he said. "This is a large multi-billion dollar market with no dominant player, presenting us with a good opportunity."
Its shares rose 5% to a five-year high of 1,006 pence, as Citi analysts said the surprise buy-back sent a "powerful signal" that Abbosh was focused on "shareholder-friendly action".
Pearson's largest shareholder, Cevian Capital, in December called on the company to switch its listing from London to the U.S., where it makes a majority of its sales.
When asked about a move, Abbosh said it was his job to drive shareholder value and to be "clear and crisp" about his growth strategy.
"We're always open to ideas," he said. "As I think you would expect us with any strategic option, is to be open to it, and look at the pros and cons, and discuss it with our shareholders."
($1 = 0.7913 pounds)