Reed Elsevier CEO Crispin Davis did not limit his remarks to education last week when he told the UBS Warburg media conference (see p. 15) that he expects the publishing giant to meet its forecast of above-market revenue growth and a double-digit increase in profits for 2002.
At the conference, Davis said that despite a tougher than expected economy, all four of Reed's operating segments—science and medical; legal; education; and business to business—should post improved margins in the year. Davis said that revenue growth in the science segment should exceed expected market growth of 3% "by a decent margin," with sales driven by the success of its online service ElsevierDirect. In the medical segment, Davis said Reed will beat the projected 4% market increase with sales approaching $1 billion. Revenue is still largely driven by book sales, although Davis expects that in the next five to 10 years, content will migrate to the Internet.
Reed's legal division, LexisNexis, is reaping the benefits of more than $350 million in investments over the last three years and is on track to top the 5% growth level predicted for the entire legal market, Davis said. Conditions in Reed's business division (which includes PW and BEA) continue to be "very difficult," Davis said, adding that the company sees no sign of a meaningful upturn and is planning for another tough market in 2003. He expects revenue in the segment to fall by about 5%—9%, but said profits will remain about even with those for 2001. The segment has cut approximately $125 million in costs due mainly to the elimination of about 1,000 positions.
Davis said he was "happy" with the mix of Reed's businesses and doesn't see making significant changes in the foreseeable future. The focus will be on organic growth and niche acquisitions, Davis said. He acknowledged, however, that if the right asset became available in the college market in the next three to five years, Reed would be interested. Davis said he isn't interested in the distance learning and adult education market, but does plan to expand the company's elhi operations in Asia and continental Europe.
The company added to its European professional publishing portfolio earlier this month with an agreement to buy Holtzbrinck's German STM business. The acquisition includes Urban & Fischer, Spectrum Akademischer Verlag, Rothacker and Servicecenter Fachverlage. The companies combined for revenue of 57 million euros in 2001.
