Reed Elsevier Shares Rally As Results Beat Expectations

Reed says that the first half results are encouraging and reflect strong performances in Science & Medical, Legal and Education, partly offset by the impact of the economic slowdown on Business to Business. Reed’s B2B publishing is currently outperforming the market, according to chief executive Crispin Davis.

Turnover rose by 8% to £2.03 billion, whilst operating profit grew by 7% to £438 million. The Reed Elsevier combined group encompasses the businesses of Reed Elsevier and Elsevier Reed Finance BV, together with their two parent companies, Reed International and Elsevier.

Profits from business publishing increased by 2% on underlying revenues up 3%. Revenues at Cahners in the US dropped by 6%, prompting Davis to reassure investors this morning. Despite the fall in revenues, underlying profits at Cahners were up on last year.

Analysts at ABN Amro say that these results indicate that Reed may well be on target to deliver double-digit earnings growth by the end of the year, despite the tough economic conditions.

On 12 July, Reed Elsevier completed the acquisition of Harcourt General (see Reed Elsevier Completes Harcourt Acquisition), following a lengthy regulatory review process, and immediately sold on to The Thomson Corporation the Harcourt businesses it did not wish to retain. The final deals gives Reed the Harcourt Science, Technical and Medical (STM) business and the US Education and Testing businesses at a total cost of approximately US$4.5 billion after taking into account the on-sale, debt assumed and other liabilities.

At 10:30am shares in Reed Elsevier were up 30½p at 606p. A range of brokers upgraded their ratings to Buy on the back of the results.

JP Morgan: Market Perform UBS Warburg: Buy Credit Lyonnais: Buy ABN Amro: Add