Shares in Reed Elsevier on Thursday rose more than 7 per cent to 532.25p after the Anglo-Dutch publishing and information group unveiled better than expected full-year results and predicted strong growth over the next two years.
The company reported pre-tax profits up 12 per cent at £562m ($1,064m) even though sales remained largely flat at £4.81bn (£4.93bn) amid robust gains from its science and medical, legal, education and business publishing divisions.
Sir Crispin Davis, chief executive, said: “The results are better than anticipated; we're out-performing in most sectors and we have exceeded expectations to deliver higher growth in cash terms.”
Five years after Reed Elsevier embarked on a restructuring strategy, Sir Crispin claimed the group was “firing on all four cylinders for the first time” and forecast annual revenue growth of 5-7 per cent likely in the next three years.
The upturn follows an overhaul involving 3,000 job losses and £500m in annualised savings. “We put a high focus in the last four-five years in taking cost out …but now this is a turning point in the market environment and we feel quite positive about the outlook for 2005 and beyond,” the chief executive added.
Of Reed's four core divisions, science and medical delivered profits of £460m, up 3 per cent at constant exchange rates, and excluding amortisation and exceptional items. The legal business, dominated by LexisNexis, was up 11 per cent at £308m, while education contributed £164m. The business-to-business division made £227m, from £236m. That helped lift free cash flow before dividends from £669m to £680m.
An increasing proportion of revenues were also derived from the internet, accounting for sales of £1.2bn last year.
The company, which will produce its next results using international financial reporting standards, said its reported earnings would have been £156m higher for 2004 under IFRS.
Sir Crispin vowed to continue the search for bolt-on acquisitions after spending almost £700m on deals last year, also promising a more generous dividend policy.
The company has proposed a final dividend of 9.6p, giving a total of 13p for the year up 8 per cent on 2003. In euro terms for the Dutch-listed arm of the company, the total pay-out will be 33 cents.
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