LONDON (Reuters) – British education publisher Pearson (PSON.L) said its balance sheet was strong enough to pay a dividend despite first-quarter revenue falling 5% after the coronavirus pandemic forced schools and colleges to close.
The company said it had not furloughed 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%.
“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 U.S. college students rapidly decline.
Fallon, who has taken a 25% 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.
Pearson’s balance sheet has been boosted by $675 million of proceeds from the sale of its remaining stake in publisher Penguin-Random House. It said it had identified another 50 million pounds 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 pounds, he added.
Its shares, which have declined 29% since the start of the year, were trading down 3% at 437 pence in morning deals.
Analysts at Citi said the 5% 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/furloughing staff, we think will build significant goodwill for when COVID-19 disruption has passed.”
Editing by Sarah Young, James Davey and Pravin Char