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A solid first quarter has prompted Reed Elsevier to reiterate its confidence of hitting full-year revenue targets, as the publishing and events company offset weaker magazine sales with growing demand for digital services.
The Anglo-Dutch group, which has ignored calls from analysts to sell off its LexisNexis Legal & Professional business, on Tuesday said that 2012 was “on track to be another year of underlying revenue and profit growth”.
The FTSE 100 publisher of scientific, business and academic journals said first-quarter results indicated that it was on track to hit consensus revenue forecasts of about £6.2bn this year, up from £6bn last year.
Increasing demand for digital services has helped Reed to offset slower magazine sales, as the publisher continued its gradual recovery from the financial crisis.
However, this month’s £110m sale of Totaljobs, the UK online recruitment advertising business, would slow the rate of revenue growth at its subsidiary Reed Business Information.
“We expect the good underlying growth in data services to be offset by print advertising declines,” added Reed, whose publications include titles such as New Scientist.
Reed Elsevier put RBI up for auction in 2008, but stopped the sale when markets fell after the collapse of Lehman Brothers.
Since then, Reed has explored other paths to reposition its portfolio, moving away from advertising-reliant businesses in favour of paid content and data services.
Reed recently put US show business magazine Variety up for sale – with a price tag estimated at $10m-$25m – and is also trying to sell its Australian magazine portfolio that includes Travel Weekly and Australian Mining.
“The reaffirmation of the outlook should be welcomed as it signals full-year numbers should be well set,” said Thomas Singlehurst, at Citi.
However, Patrick Yau, at Peel Hunt, added: “Although the trading performance looks arguably worthy, we look for excitement elsewhere in the sub-sector from faster growing peers such as UBM and Informa at a price/earnings discount.”
Strong demand for underwriting products drove sales at Reed’s LexisNexis insurance data and analytics business in the three months to January 31, with better sales to state and local governments being “more than offset by federal budget constraints”, said the group.
The publishing group’s confidence in its full-year expectations comes in spite of a backlash from 10,000 academics across the globe, who have joined a boycott against Elsevier publications.
The academics have refused to submit or peer-review papers for Reed’s scientific journals, which include the American Journal of Medicine and The Surgeon.
The academics believe that Reed’s prices are too high and object to the group’s practice of bundling journals that they believe prompts libraries of universities to spend money on titles they may not want.
Reed Elsevier shares edged up by 11p, or 2 per cent, to 526½p.