Bloomberg News

Wolters Kluwer Says European Business Won’t Grow in 2013

November 15, 2012

Wolters Kluwer NV, Europe’s largest tax and legal publisher, said business in the region is unlikely to grow next year because of lingering recessions and a decline in demand for printed material.

“In 2013, we’ll not see any improvement in Europe, and so we’ll continue to manage our business aggressively,” Chief Executive Officer Nancy McKinstry told investors yesterday at a conference in Barcelona organized by Morgan Stanley. “We are in the process of re-balancing our footprint” in the region.

Wolters Kluwer and peers, including Reed Elsevier Plc (REL), have focused on growth through online subscriptions, software and service offerings to make up for a sales drop in printed products and the economic slowdown in Europe. McKinstry reiterated that Alphen aan den Rijn, Netherlands-based Wolters Kluwer (WKL) will meet its financial targets for this year, helped by growth in markets abroad.

Revenue from Asia, which “today is a relatively small part” of the Dutch publisher’s earnings, “certainly will continue to grow very well,” McKinstry said in an interview at the conference. It’s “an area that we are investing in.”

Wolters Kluwer fell as much as 1.3 percent to 14.28 euros and was trading down 1.2 percent at 10:27 a.m. in Amsterdam. That pared the stock’s gain this year to 7.1 percent, valuing the publisher at 4.32 billion euros ($5.5 billion).

Chinese Expansion

McKinstry outlined plans in August to expand Wolters Kluwer’s workforce in China by 17 percent in the following six months because of expected growth in the country’s health and legal industries. Asia accounted for 4.8 percent of the publisher’s sales in 2011, compared with 50 percent from North America and 38 percent from Europe outside the Netherlands.

The Dutch company is confident of achieving a ratio of net debt to earnings before interest, taxation, depreciation and amortization of 2.5 times this year, McKinstry said in the interview.

Reed Elsevier, the owner of the LexisNexis database, has been disposing of trade magazines and is seeking to grow at its remaining businesses. The London-based publisher sold Hollywood trade journal Variety last month and has put Australian titles in the market.

‘Organic Growth’

“We don’t have any targets or budgets for acquisitions,” CEO Erik Engstrom said in an interview at the Barcelona conference. “We have an organic growth strategy and we only supplement that with selective acquisitions when they can accelerate our strategy and we can do so with good returns in places where we are natural owners.”

Completed and planned disposals will be “mildly dilutive” to earnings per share in the short term, Reed Elsevier said in July. To counter that effect, the company has set aside 250 million pounds ($396 million) to finance share buybacks this year, it said on Nov. 8.

Reed Elsevier dropped as much as 1.2 percent to 613.5 pence at 9:28 a.m. in London. The stock has gained 18 percent this year, valuing the company at 7.4 billion pounds.

To contact the reporters on this story: Manuel Baigorri in Barcelona at mbaigorri@bloomberg.net; Kristen Schweizer in London at kschweizer1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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