Bloomberg News

Reed Elsevier May Say Profit Rises on Science, Medical Unit

July 26, 2006

Reed Elsevier Plc (REL), owner of the LexisNexis database and the Harcourt educational publisher, may say first-half profit increased 54 percent, helped by the performance of its science and medical and legal divisions.

London-based Reed will probably say net income advanced to 206 million pounds ($380 million) from 134 million pounds a year earlier, according to the median estimate of four analysts in a Bloomberg News survey.

Reed's science, technology and medical division had a ``positive'' start to 2006, with journal subscription renewals and online sales ``progressing well'' in the science and technology unit, the company said in April. Reed reported an increase in 2005 profit in February as science, legal and business publishing revenue rose.

``Science and medical will be solid, the comparative is relatively light and legal is looking pretty good,'' Anthony De Larrinaga, an analyst at SG Securities, said today.

Revenue probably advanced to 2.55 billion pounds from 2.37 billion pounds, according to a survey of 14 analysts. Reed's 2006 performance is in line with its expectations of at least 5 percent underlying revenue growth, the company said in April.

Reed's education unit fell out of line with the No Child Left Behind legislation in the U.S., and grew 3 percent last year compared with a target of 9 percent to 10 percent. The company's alphabet-based reading material was rejected by schools in favor of a phonetics-based approach, and its testing business won fewer U.S. state contracts than Reed expected.

Education Unit

Reed has changed management and sales operations at its Harcourt Education unit, and said in April it expected the measures to have a ``positive'' impact this year on revenue growth.

Education and business-to-business ``are a bit more suspect in terms of their growth capacity in the first half of the year, particularly education because of the problems in supplemental and testing, as well as the industrywide slowdown in K-12 adoptions,'' De Larrinaga said.

Patrick Kerr, a spokesman for Reed, said the company declined to comment on analyst estimates ahead of the company's earnings.

Shares of Reed have slipped 2.6 percent this year, trimming the company's market value to 6.71 billion pounds. The stock gained 4 pence to 532 pence in London today.

To contact the reporter on this story: Aisha Phoenix in London at aphoenix@bloomberg.net.

To contact the editors responsible for this story: Zimri Smith at zsmith@bloomberg.net.


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