2nd UPDATE: Reed Elsevier Slumps On Share Placement, Outlook
30 Luglio 2009 - 3:22PM
Dow Jones News
Shares in Anglo-Dutch publishing group Reed Elsevier PLC (ENL)
plummeted Thursday after it posted a sharp fall in first half net
profit, lowered its guidance and announced plans to raise hundreds
of millions of pounds in a share placing as the economic slump
began to hurt previously resilient parts of its business.
The planned share placing underscores the continued drag on
earnings from its business information unit, RBI, which it failed
to sell last year and which is severely exposed to the advertising
slump.
Net profit in the six months to Jun. 30 fell 48% to GBP161
million, from GBP309 million a year earlier, mainly on
restructuring, impairment and other financial charges.
Reed Elsevier lowered its guidance for 2009, saying that it
expects adjusted earnings per share growth to be "under some
pressure for the full year" at constant currencies. Earlier this
year it said it expected adjusted earnings per share to grow.
"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."
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.
To shore up its balance sheet, Reed Elsevier said it plans a
share placement of up to 9.9% of its issued share capital in both
London and Amsterdam, where it is listed, which in total would
amount to 172.2 million new shares. At current prices, Reed would
raise around GBP450 million in London and approximately EUR450
million in Amsterdam, but the issue is likely to be at a discount
to current prices.
The company also said it needed to take further action after it
failed to sell its troubled Reed Business Information unit, or RBI,
last year. The proceeds of that sale were to be used to pay off the
$4.1 billion of debt that it racked up for the acquisition of data
aggregation firm ChoicePoint in 2008. After the failure of the RBI
sale, Reed issued bonds to help pay down that debt.
During a conference call, Smith said that selling RBI as a whole
is now off the agenda, and that Reed is now only looking to sell
controlled circulation magazines in the U.S., which are part of
RBI.
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 to
Lexis Nexis, 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. Organic revenue, which strips
out ChoicePoint, fell 7%.
Around 1235 GMT, Reed Elsevier shares traded 13.9% lower at
EUR7.19 on an overall higher AEX market in Amsterdam. In London,
meanwhile, shares fell 13.8%, or 66p, to 414p, by far the biggest
faller on a overall slightly higher FTSE 100.
Company Web Site: www.reed-elsevier.com
-By Maarten van Tartwijk; Dow Jones Newswires; +31 20 571 5201;
maarten.vantartwijk@dowjones.com