LONDON - Reed Elsevier, the educational publisher and owner of the LexisNexis information service, reported Thursday a 60 percent fall in net profits for 2008 and said it would ramp up a restructuring plan to offset tougher market conditions.
Despite the fall in net profit, the Anglo-Dutch company also posted a 24 percent rise in adjusted pretax earnings _ the figure more closely watched by analysts _ and said that adjusted profits, excluding currency swings, would again increase this year.
Reed Elsevier shares rose 2.7 percent to 535 pence in morning trading on the London Stock Exchange. “2009 is clearly going to be a more difficult year with most of the world’s largest economies currently in recession,” Chief Executive Officer Crispin Davis said.
Reed Elsevier, which makes 80 percent of its operating profits from scientific and legal professional products, posted net profit of 476 million pounds ($685 million), down from 1.2 billion pounds in 2007, when results were boosted by a 309 million pounds profit from discontinued operations.
Revenue rose 16 percent to 5.33 billion pounds. Adjusted pretax profits rose to 44.6 pence per share from 35.9 pence per share.
Adjusted figures refer to profit before amortization of acquisition-related intangible assets _ such as the value of a brand _ as well as exceptional restructuring and integration costs for acquisitions. It also excludes the equity share of taxes in joint ventures.
Reed Elsevier said its exceptional restructuring costs excluded from the adjusted profit relate largely to the $290 million restructuring program it announced in February 2008.
It said Wednesday that it would expand that restructuring plan to include its Reed Business Information unit, the publisher of magazines including Variety and New Scientist, which it had put up for sale last year in an attempt toreduce exposure to advertising markets.
The company halted the sale of the unit in December after bids dropped amid tightened funding conditions during the global credit squeeze.
It had planned to use proceeds from selling the unit to repay debt on its $3.5 billion purchase of ChoicePoint Inc., a U.S.-based provider of data services to the insurance industry, in February 2008. Reed assumed around 300 million pounds ($594.2 million) in debt in that deal.
The adjusted profit figures also exclude the sale of its publishing unit Harcourt Education to U.S.-based Houghton Mifflin for 2 billion pounds in January.
Davis said that the company’s earnings from business-to-business services for advertising and marketing “are expected to show a significant profit decline this year, including the major effect in our exhibitions business of the net cycling out of biennial shows.”
He added that key professional markets served by Elsevier and LexisNexis were more resilient than most, but demand for advertising and marketing services was much more affected.
“Our businesses here are expected to show a significant profit decline this year,” he said.
