Reed Elsevier On Target For Double-Digit Earnings, Despite Tough B2B Market

Business to business publishing, particularly in the technology sectors, has been badly affected by the economic downturn; the Science & Medical, Legal and Education markets have remained largely unaffected, although not immune, says Reed Elsevier.

The company says that its Science business is performing well, with online usage growing strongly. The Harcourt division, which it acquired in June this year (see Reed Elsevier Completes Harcourt Acquisition), is running as expected, with some business momentum having been lost in the protracted acquisition process. Legal and Education are also performing strongly.

It is the B2B publishing sector this is proving difficult for Reed Elsevier. The US markets are especially weak following 11 September. The company says that ‘aggressive action’ has been taken to further cut costs. It is also focusing on building market share – a good method of offsetting the downside of poor trading conditions.

Revenues at the business division are expected to be down 5% on 2000; operating profits slightly more, discounting acquisitions and disposals. Reed Elsevier anticipates that this will nevertheless be a significant outperformance of the B2B sector.

Looking to next year, Reed predicts that the US education publishing market will be ‘less robust’ than this year, although it expects another year of outperformance for Harcourt. The financials are likely to be lower in H1 2002, due to more difficult comparables with a strong H1 2001. The second half should deliver comparative growth, given the easier comparables.