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Reed Elsevier Reports 5% Revenue Growth

After delivering a solid set of results with strong earnings growth, Reed’s recovery has started to gain momentum. Underlying revenue growth was +5% (+3% excluding biennial exhibition cycle) and adjusted operating profit growth was +7%; overall growth +8% at constant currencies.  Adjusted EPS was +11% to 24.7p for Reed Elsevier PLC; +18% to €0.47 for Reed Elsevier NV.

Reed said first-half growth was largely driven by a strong performance in its events and exhibitions business as well as the launch of new products.  Revenues grew across all business areas except in LexisNexis Legal & Professional, where revenues were flat at £780m. Operating profit rose 6 per cent to £100m.

Reed Elsevier said it would accelerate plans to dispose of non-core businesses.  Reed has been gradually divesting its more advertising-dependent businesses while focusing on online subscription and research products such as its LexisNexis databases.

LexisNexis Legal & Professional (12% of adjusted operating profit): Underlying revenue growth +1%; continued good growth in new sales and usage of legal research in law firms and corporate customers and in international online; moderated by print and marketing services declines

LexisNexis Risk Solutions (22% of adjusted operating profit): Underlying revenue growth +5%; Insurance +7% driven by product extensions across carrier workflow; good growth in Business Services. Modest growth in Screening; moderating declines in Government

Calls for a break-up of Reed Elsevier from some analysts were met with silence at the start of the year. Erik Engstrom, chief executive, reiterated on Thursday that a break-up was not on the agenda and that investors were not pushing for it.  The flat results of LexisNexis Legal may prompt shareholder activists to try harder.

Reed Business Information (7% of adjusted operating profit): Underlying revenue growth +1%; continued good growth in data services and marketing solutions, leading brands broadly stable, declines in other magazines & services. Integration of CBI China, Accuity and Ascend on track. Totaljobs, MarketCast, and other small disposals completed; further disposals announced. Underlying operating profits +10%; record margin of 18% reflects process efficiency and portfolio changes

FY 2012 outlook: Good growth in data services, stable leading brands, continued weakness in other magazines & services

Calls for a break-up of Reed Elsevier from some analysts were met with silence at the start of the year.  Erik Engstrom, chief executive, reiterated on Thursday that a break-up was not on the agenda and that investors were not pushing for it.  The flat results of LexisNexis Legal may prompt activists to try harder.

Source: Reed Elsevier Earnings ReleaseFinancial Times

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