Shares in Anglo-Dutch publishing group Reed Elsevier PLC (ENL) plummeted Thursday after it announced plans to raise hundreds of millions of pounds in a share placing aimed to strengthen its balance sheet, and after net profit slumped by 48% in the first half as the economic downturn began to hurt previously resilient parts of its business.

The company said the outlook remains challenging and that overall organic revenue and operating profit will remain under pressure this year, and said it will examine every opportunity to increase cost efficiency further.

Reed Elsevier said it plans a share placement of up to 9.9% of its issued share capital, or 109.2 million new shares.The company said it aims to strengthen its balance sheet after it failed to sell its troubled Reed Business Information unit, and it raised debt to acquire data aggregation firm ChoicePoint.

"The downturn in macro-economic conditions over the last year has been severe and unprecedented", Chief Executive Ian Smith said in a statement. "The depth and length of the downturn is however having some effect on even our most resilient businesses."

Smith said the strengthening of the balance sheet will ensure the company is appropriately resourced.

At 0850 GMT, Reed Elsevier shares traded 12.8% lower at EUR7.28 on an overall higher AEX market in Amsterdam. In London, meanwhile, shares fell 14.5% to 411p, by far the biggest faller on a overall slightly higher FTSE 100.

Reed said net profit dropped 48% to GBP161 million, from GBP309 million a year earlier, mainly the result of declining sales in advertising and promotion markets, which hurt its Exhibition and Business Information units.

However, the company also said that its most resilient businesses, content archive service Lexis Nexis and medical and scientific publisher Elsevier, weren't immune from the downturn. On a pro-forma basis, which includes the contribution of ChoicePoint, underlying revenue was flat at these units. Adjusted operating profit, a figure closely watched by analysts and which includes amortization, joint-ventures and exceptional items, of GBP782 million, up 26% compared with GBP619 million last year. In constant currencies however, adjusted operating profit was up only 5%.

For the total group, revenue for the first half rose 25% to GBP3.06 billion, and 3% in constant currencies, chiefly as a result of the acquisition of ChoicePoint, as organic revenue, which strips out ChoicePoint, declined 7%.

Company Web Site: www.reed-elsevier.com

- By Maarten van Tartwijk; Dow Jones Newswires; +31 20 571 5201; maarten.vantartwijk@dowjones.com