Reed Elsevier (NYSE: RUK) will continue to “re-engineer” its Reed Business Information publisher and its costs, it said as it reported RBI annual operating profits dropped 35 percent in 2009.
“The print advertising markets are structurally challenged and need to reinvent themselves,” new Reed Elsevier CEO Erik Engstrom told analysts this morning. “Online advertising services, however, will continue to see good growth.”
The future for Variety and New Scientist publisher RBI: “Continued restructuring of our advertising-based portfolios – there will, over time, be other asset disposals to come. We’re going to have to realign the cost base with lower expectations from those businesses.”
The Anglo-Dutch group’s earnings report says of RBI: “Print subscription revenues declined (by) less and data services saw good growth“. But it acknowledges it was “a very tough year”, with “advertising markets severely impacted”. It expects online advertising to “recover”.
After deciding against selling RBI because of the downturn a year ago, Reed Elsevier has nevertheless cut jobs and is lopping off chunks of the B2B publisher – TWGroup, 47 RBI U.S. titles, its Scandinavian wing and this week another four U.S. titles. This will continue, not least because RBI didn’t manage to sell all those 47 at the time. “Other discussions are continuing“, CFO Mark Armour told analysts this morning.
Elsewhere in Reed Elsevier…
— LexisNexis is motoring: US Legal income fell six percent on customer cutbacks and will continue to be “weak” this year, but the legal publisher and data provider’s revenue is up 13 percent, even though “strong growth in online revenues was offset by print declines“, Engstrom said. “If you think about it, lawyers’ time will still continue to be extremely valuable. I am personally very happy that we own this business.” Indeed, it’s Reed Elsevier’s biggest sales contributor.
— The events business is crashing: Sales of exhibition space at conferences, like Midem and Mipcom, were down across the world, meaning 21 percent less revenue. “It’s fundamentally a good business – it’s just cyclical,” Engstrom said. “Face-to-face will remain an important part of the marketing mix.”
— Science-and-health publishing is growing: Subscriptions at Elsevier itself held up well, meaning four percent higher revenue. Online sales grew in medical reference, clinical decision-making and nursing areas.
Across the group, Reed Elsevier shaved off 5.4 percent of costs (£227 million). 2009 revenue is flat from 2008 at £6 billion, and operating profit fell 22 percent to £787 million. All these figures at at constant currency rates since the group operates in the UK, Holland and is strong in the U.S.