Shares in information solutions group Reed Elsevier rose strongly on Thursday after the firm reported decent underlying revenue and profit growth in the first half, with all five business areas contributing.
Revenues increased by 5% from £2,904m to £3,053m in the six months to June 30th, up 5% on an underlying basis (+3% excluding biennial event cycling), slightly ahead of the consensus estimate of £3,047m.
Adjusted operating profit increased 9% from £774m to £845m, up 7% on an underlying basis, and above the £824m forecast. Margins increased by 1.1 percentage points to 27.7%.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"1H figures look good overall with some decent like-for-like growth and margin slightly above our forecast, especially in Lexis Nexis and RBI. Outlook is reasonably positive, with REL expecting to deliver FY in line with expectations," said analysts at Investec.
Meanwhile, the interim dividend was raised by 6% to 6.0p per share. Net borrowings totalled £3.3bn, down from £3.4bn the same period the year before.
"We have continued to transform our core businesses through organic development by investing in our digital platforms and developing and launching new online products and services. We have extended our position in high growth markets through organic new launches supported by selective small acquisitions," said Chief Executive Officer Erik Engstrom.
He said that the company is accelerating the disposals of its businesses that "no longer fix our strategy"; completed and planned disposals are expected to be mildly dilutive to earnings per share in the short term but the group intends to use divestment proceeds to buy back shares this year.
"The outlook for the macro economic environment remains uncertain, but based on our good first half results, and the continuing improvement in the quality of our earnings, we expect to deliver underlying revenue and profit growth for the year in line with our expectations," Engstrom said.
By 10:13, shares were up 3.87% at 536.5p.
BC
-
FTSE 100 hits record highs – why is it rising and will we see more gains?Advice UK equities have been described as unloved for a long time but as the FTSE 100 hits new highs, we explain if now is the time to buy British.
-
How to invest in copperIt may be time to invest in copper as the red metal appears poised for a big jump. Dominic Frisby looks at what should investors should buy
