UPDATE: Reed Shares Soar As It Confirms Full-Year Guidance

29th Jul 2010 10:02

(Rewrites, adds share price detail, analyst comment) By Roberta B. Cowan Of DOW JONES NEWSWIRES AMSTERDAM (Dow Jones)--Shares in Anglo-Dutch publisher and events company Reed Elsevier PLC (REL.LN) soared Thursday after it reported better-than-expected first half results and reiterated its full-year outlook, although it cautioned that recovery would be gradual. Chief Executive Erik Engstrom said, "While we have seen an improvement in the general economic environment and the actions we are taking are beginning to bear fruit, recovery will be gradual as conditions remain constrained in many of our markets." Reed said adjusted operating profit before exceptional items--one of the key figures tracked by U.K. analysts--fell 3% to GBP758 million in the six months to June 30 from GBP782 million a year earlier, beating market expectations of GBP700 million. Revenue for the group fell 2% to GBP2.99 billion from GBP3.06 billion, in line with expectations. The company confirmed its full-year outlook for a modest reduction in adjusted operating margin due to a weak revenue environment and increased investment in legal markets. Analysts said almost every unit in the business beat expectations, and the market was cheered by the confirmation of full-year guidance. At 0900 GMT Reed was the highest riser on the FTSE 100 index, trading up 24 pence, or 4.5%, at 556 pence in a slightly higher London market. Reed Elsevier owns the legal information business LexisNexis and medical publications such as Gray's Anatomy and the Lancet. It also publishes entertainment-trade magazine Variety. Reed has been suffering the effects of a weak advertising market and declines in customer activity and budgets over the last two years have constrained the development of subscription revenue in its core professional markets. Still, Chairman Anthony Habgood said the company has seen a "significant moderation in the rate of decline in advertising and promotion markets, which appear to be stabilising." Organic revenue growth for the first half of 2010 was 1%, up from a 7% decline in the first half of last year. Reed Business Information, which publishes New Scientist in the U.K. and Publishers Weekly in the U.S. and has been the company's most problematic division, said revenue fell 19% compared with the same period last year. The firm said it continues to take significant action to reduce costs at this unit and reshape the portfolio through selling or closing non-core assets such as its controlled circulation titles in the U.S. Elsevier, which publishes science and health publications, reported a 2% rise in revenues for the period, as it suffered from constraints on academic budgets. Legal information division LexisNexis reported flat revenues, while Reed Exhibitions reported a 8% rise in first-half revenue as attendance improved at the majority of its annual events. Reed said it will keep its interim dividend at 5.4 pence. -By Roberta B. Cowan, Dow Jones Newswires; +3120-571-5200; [email protected] (END) Dow Jones Newswires July 29, 2010 05:02 ET (09:02 GMT)