Thursday, July 26, 2007

Reed Elsevier Reports

Sir Crispin Davis noted that the sale of Harcourt was made on 'favorable terms' and it looks like the company will net over $2.0billion from this sale. Proceeds are said to be dividended to shareholders sometime next year. (In a related note, Pat Tierney the head of Harcourt will retire when the sale is completed).

The first half results as reported today were mixed with revenue flat but in excess of many analysts estimates. The company confirmed they are on target for a 10% increase in EPS. Revenues were up 6% and operating income up 10% in constant terms. All operating units performed consistently in revenue but Lexis Nexis lead the group in operating income growth of 13% and Business Information lagged at 7%. (The company is impacted by the weak dollar and taking into account currency changes total revenue growth was only 1% ).

  • Elsevier: good momentum, strong renewals, good book revenue, growing online sales
  • Lexis: positive outlook, good demand for online services and total solutions, and risk and analytics
  • Business Information: cycling in of biennial shows, online revenue growth more than off-setting declines in print.
The company sees a positive market environment and good business momentum across all its businesses which will drive the EPS growth. Additionally, they have a renewed initiative on cost reductions across the businesses and have hired senior level managers to support particular initiatives.

Other highlights:
  • Digital revenues are on target to represent 45% of total revenue
  • To focus on additional cost efficencies the company has hired c-level positions in outsourcing, procurement and technology
  • Davis commented to journalists that the company rejected a P/E approach for the business information division in 2006. The unit could be worth over $2.0bill
  • Davis also said he continues to look for acquisitions and is particularly interested in those over $100mm.
Reed Presentation

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