Promethean World, the supplier of interactive learning technologies, is keen to communicate an “improving trading trend” in its Q311 (to end September). The claim is valid; compared to Q211, total revenues were indeed up – by 3% to £68.0m (although there’s no indication of the constant currency growth rate and we assume this was closer to ‘flat’ quarter-on-quarter). However, a tough few quarters (particularly in Q1 – see Promethean: core business suffers big Q1 decline), means that year-to-date revenues are still well off 2010 levels. Year-to-date, group revenue is down 9% to £175.9 million (5% lower on a constant currency basis). In its core ‘interactive display’ business (representing close to 90% of the business), year-to-date revenues are down 6% (volumes shipped down 8%), while in its ‘learner response system’ business year-to-date revenues are down 30% (volumes shipped down 25%).
It’s hard to be positive about the short-term prospects for Promethean in the current climate. However, the group continues to invest in its learner response system portfolio by, for example, expanding its electronic testing software. This is the right thing to do. Short-term prospects for the education sector might look bleak. But in the longer-term, schools will have to start reinvesting in technology in the classroom. Teachers will fail to engage pupils if they are faced with technologies in school that are less advanced than the ones they are used to at home. Promethean needs to be brave. If it can keep its head above water during the tough times, and keep modernising its technology offerings in line with consumer trends, it will be well positioned for a strong recovery in the market in a few years time. Fortunately Promethean appears to be well managed financially and its cash generation remains strong. We need leading education technology firms like Promethean to persevere in this tough market.