February 18, 2010 / 3:04 PM / 8 years ago

UPDATE 4-New Reed CEO signals continuity after 2009 turmoil

* New CEO confirms 2010 forecast for slightly lower margins

* ‘09 sales up 14 pct to 6.07 bln; flat in constant currency

* Oper profit up 1 pct in constant currency

* Scientific division sales up 4 pct in constant currency

* Shares close down 2.6 pct in Amsterdam; 1.5 pct in London

(Updates share price; results figures; analyst comment)

By Georgina Prodhan

BARCELONA, Feb 18 (Reuters) - Reed Elsevier’s ELSN.AS (REL.L) new chief executive confirmed the company’s margin outlook, investment plans and portfolio strategy on Thursday, but gave little sign of new initiatives after a tumultuous 2009.

Reed Elsevier shares fell 1.5 percent in London trade. But the dual-listed stock lost 2.6 percent to close at 8.41 euros in Amsterdam, underperforming the European media sector .SXMP, which gave up only one-half of a percent on the day.

Making his first results announcement since taking over from Ian Smith, whose eight-month tenure ended abruptly in November, Erik Engstrom also said he would concentrate on shareholder value and focus each unit on its own priorities.

Asked what he would do differently at the Anglo-Dutch group — which sells publications and software to legal, academic and medical professionals and owns the world’s biggest exhibitions business — Engstrom did not want to comment on his predecessor.

“We will refocus on the most attractive opportunities, not only high-growth markets but ones that deliver good returns,” he said on a conference call after the company reported roughly flat 2009 sales and operating profit as expected on Thursday.

Ian Smith, an industry outsider, took over from long-time, conservative CEO Crispin Davis in early 2009. The company said when he quit that he was the wrong man for tight economic times, through some blamed a large rights issue. [ID:nLB114697]

Group revenue for 2009 grew 14 percent to 6.07 billion pounds ($9.57 billion), which was in line with analysts’ expectations. However, sales grew zero percent when results for the multinational company were kept constant in terms of currency effects. Similarly, adjusted operating profit rose 1 percent in constant currency terms to 1.57 billion pounds.


Sales at scientific-publishing division Elsevier, previously led by Engstrom, grew 4 percent at constant currencies to 1.98 billion pounds and adjusted operating profit rose 9 percent to 693 million pounds, or 44 percent of group profit.

“With the exception of Science, the revenue environment is clearly weak and there are few obvious green shoots,” Alex DeGroote of UK broker Panmure Gordon said in a research note.

Revenue from the company’s LexisNexis legal products fell 4 percent, stripping out the impact of data aggregation company ChoicePoint which Reed bought in late 2008, reflecting a downturn in the industry as well as a loss of market share.

LexisNexis revenue was 2.56 billion pounds and operating profit was 665 million, including identity verification company ChoicePoint.

LexisNexis, which has lacked investment in a fiercely competitive market, has been losing market share to Thomson Reuters’ (TRI.TO) Westlaw legal products, and also competes with Dutch publisher Wolters Kluwer’s (WLSNc.AS) legal business.

Both Thomson Reuters and Wolters Kluwer are due to report results next week.

“The business trends seen in US legal and international markets are expected to continue into 2010, reflecting the continuing pressures on the legal industry and the subscription nature of much of the revenue,” Reed said in a statement.

It said corporate, government and academic demand for legal services were all weak, and law firms were also cutting back spending on its directory listings business.

Engstrom said capital expenditure would rise to 5 percent from 4 percent of the company’s total revenues this year as the company invested to boost the legal business.

Engstrom also said he would pursue cost efficiencies relentlessly, after cutting costs by 5 percent last year.

Reed Exhibitions, whose events include the London Book Fair and the Cannes International Boat Show, reported a revenue drop of 21 percent to 638 million pounds and operating profit fell 28 percent to 152 million as companies cut back on marketing.

Trade-magazines division Reed Business Information’s revenue fell 18 percent to 891 million pounds and operating profit plummeted 35 percent to 89 million.

Erik Engstrom said he had no plans to try to sell trade magazines as a single block, although it is divesting or closing some titles.

He said the exhibitions business was dragging along the bottom of a cycle, and that Reed intended to keep the business. ($1=.6344 Pound) (Editing by Jon Loades-Carter and Sharon Lindores)

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