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Reed pays for growth
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August 9, 2001: 3:34 a.m. ET
Anglo-Dutch publisher posts profit drop as it expands, moves business online
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LONDON (CNN) - Anglo-Dutch publisher Reed Elsevier posted a 30 percent fall in net income as acquisition spending offset rising online revenue.
The company announced in February it would be investing £750 million over three years to move its publishing businesses onto the Web.
Reed Elsevier, co-owned by London-based Reed International and Dutch company Elsevier, said first-half profit fell to £71 million ($100 million), or 2.8 pence a share, from £102 million, or 4.5 pence a share, last year.
Reed publishes information for groups such as scientists, doctors, lawyers and business people, and completed the $4.5 billion acquisition of U.S. education publisher Harcourt General on July 12.
The company said pretax profit before one-time items and amortisation of goodwill rose a bigger-than-expected 17 percent to £410 million from a previous £351 million.
Revenue rose 8 percent to £2.04 billion from £1.79 billion in the same six months of 2000. Reed said strong performances in its science and medical, legal and education divisions was partly offset by the effects of the U.S. economic slowdown on business-to-business income.
"Our investment programme is building revenue momentum and we remain on track to deliver on our financial goals of above-market revenue growth and double-digit earnings growth for 2002 and beyond," said Crispin Davis, Reed's chief executive.
"The $4.5 billion acquisition of the Harcourt businesses is a major step forward in the development of our strategy and will further accelerate our financial progress," he added.
The scientific publishing arm, ScienceDirect, continues to expand, with 60 percent of subscriptions by value now including the online service, Reed said. Monthly page views reached 25 million in June, up 67 percent from the beginning of the year.
However, the group's U.S. business magazine unit Cahners posted a 6 percent fall in revenue before acquisitions and disposals. Sales were affected by the slowdown in the U.S. economy, with advertising income falling in almost every sector, Reed said.
Reed shares (REED) rose 1.1 percent in London on Thursday to 583 pence after the results were announced. 
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