Reed Cautious On 2004 Prospects

Profits at the Anglo-Dutch publisher rose by 3% in the first half of 2003 (see Reed On Target As Profits Rise In H1) and its market performance has remained encouraging. Sales growth in the Science & Medical and Legal divisions is more than offsetting weakness in Education and Business.

It is envisaged that 2003 will bring about a third successive year of double digit adjusted earnings per share (EPS) growth. However, 2004 is looking less promising with difficult economic conditions, increased investment and a flat education market likely to impact on profits.

As a result, Reed is targeting mid to high single digit growth in adjusted EPS for next year. Improving revenue growth and continued cost efficiency should ensure double digit earnings growth for 2005 and beyond but the publisher is not yet budgeting for a significant upturn in its markets.

“If an economic recovery really does take hold and becomes more broadly based, then Reed Business should recover quickly, most immediately in its advertising revenues. Given the dramatic improvements made in operational efficiency over the last three years, the flow through to increased profitability will be strong,” the firm said in a statement.

Shares in Reed Elsevier were down 23.25p at 470.75p at 11am today.