Reed Elsevier sees strong profits but subdued sales

Information solutions provider Reed Elsevier saw underlying revenues increase 2% in 2011, with all five business areas contributing to growth except the Exhibitions division, which was held back by biennial cycling.

The group, which operates in the science, medical, risk, legal and business sectors, said that underlying growth was driven mainly by strong performances in its core electronic subscription and transaction businesses. Total revenues (after the effects of acquisition, disposals and currency translation) fell by 1% to £6,002m from £6,055m the year before. When recorded in euros, revenues fell 3%.

Excluding biennial cycling, underlying sales growth would have been slightly better, at 3%. The group assured that underlying revenues in Exhibitions will benefit in 2012 from the net cycling in of biennial events.

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Meanwhile, pre-tax profits surged 23% from £768m to £948m in 2011. The full-year dividend was raised by 6% to 21.55p, up from 20.4p the year before.

"2011 was a year of good progress both strategically and financially. Our large subscription and data businesses are performing well and uncertainty in the macro economic environment in the latter part of the year had only a limited impact on some of our more cyclical businesses," said Chief Executive Officer Erik Engstrom.

"The macro economic outlook remains uncertain, but by delivering highly valued products and services to our professional customers, and a relentless focus on process efficiency, we expect to deliver another year of underlying revenue and profit growth in 2012," Engstrom added.

Adjusted operating cash flow was flat at £1,515m (£1,519m in 2010), but the rate of conversion of adjusted operating profits into cash flow fell from 98% to 93%, as a result of higher capital expenditure and lower depreciation due to disposals and accelerated depreciation in 2010.

Debt fell by just £22m over the year but still stood at £3,433m.

Separately, the firm announced that David Brennan, currently the Chief Executive Officer of AstraZeneca, would be appointed to the supervisory board of Reed Elsevier NV and as a non-executive director of Reed Elsevier PLC with effect from November 1st 2012, subject to shareholder approval.

"As a truly international executive with deep knowledge of the world's healthcare markets he will bring highly relevant experience to our board discussions," said Chairman Anthony Habgood.

BC