An otherwise woeful first half result for IDP Education (ASX: IEL) didn't seem to matter today as the Melbourne-based company announced its English testing volumes had returned to pre-pandemic levels in December.
Conditions gradually improved during the half and by the end of December 2020, testing volumes were broadly in line with those experienced in December 2019 prior to the pandemic.
IDP Education, whose CEO Andrew Barkla was the country's highest paid in a publicly listed company in FY19, reported a 49 per cent slump in net profit after tax (NPAT) to $29.7 million in the six months to 31 December 2020.
If it weren't for cost cutting measures to the tune of $72 million, the group would have almost certainly been in the red.
Uncertainty around travel and border restrictions meant volumes for student placements were down 37 per cent, and the company's biggest source of revenue - International English Language Testing System (IELTS) - dropped 26 per cent to $158 million.
But all of these negative results were outshone by a gradual improvement in trading conditions over the course of the half, with testing volumes in December "broadly in line with those experienced in December 2019 prior to the pandemic".
IEL shares jumped 7.2 per cent today to $26.66, pushing the company's market capitalisation close to $7 billion.
"IELTS demonstrated its through-the-cycle appeal as volumes rebounded hand-in-hand with country lockdowns and restrictions easing," Barkla says.
The company's digital marketing business, driven by IDP Connect, saw a nine per cent year-on-year increase in revenue.
"This year our insights have become critical for higher education institutions around the world," Barkla says.
"The increased demand for our digital services reinforces that our higher education clients are relying on our data to develop their post-COVID recruitment strategies.
"When comparing our H2 FY20 and H1 FY21 results, it is encouraging to see IDP's recovery is already underway."
The company also reported a better performance for the United Kingdom, with volumes down just 12 per cent as students are now able to travel to the UK to commence their studies. Underlying demand for IDP's other key destination, Canada, has also been strong but volumes were down 39 per cent due to border closures and delays in visa processing.
"With our global teams in place, a supported pipeline of students, and increased digital capabilities, we are beginning to capture the demand as our customers reignite their global travel and study ambitions."Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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