Pearson H1 financial update: ‘I see gen AI as a net positive’

Pearson plc (LON: PSON) says its adjusted operating profit in the first half of the year was up 44% on a year-over-year basis. Shares are up only slightly on Monday.

CEO Bird’s remarks on CNBC

The education company reported £236 million ($303.2 million) of profit before tax versus £185 million in the six-month period last year.

Pearson attributed the strength in H1 partly to its cost efficiency programme. On CNBC’s “Squawk Box Europe”, its CEO Andy Bird said today:

In our virtual schools business, post-pandemic drop off is a lot less severe than expected. I think that’s because we’ve seen an increase in awareness of the value, flexibility, and quality of virtual schools.

The multinational saw a 5.0% annualised growth in sales to £1.88 billion in the first six months of 2023, as per the press release.  

AI is not a threat for Pearson

Pearson also reiterated its full-year guidance today for adjusted operating profit, profit margin, and revenue. More importantly, CEO Bird is convinced that Generative AI will likely benefit the company.

I see generative AI very much as a net positive. I’m very optimistic about the opportunity. We are in effect creating our own LLMs that sit on top of other larger LLMs.

His view is in sharp contrast with what the U.S. peer Chegg flagged earlier this year. The London-listed firm declared 7.0 pence a share of interim dividend on Friday versus 6.6 pence per share a year ago.

Wall Street currently has a consensus “overweight” rating on the U.K. stock that’s down 7.0% for the year at writing.