Reed Elsevier has announced it is looking to make up to £100m a year in cost savings at Reed Business Information, the B2B publishing division that it failed to sell last year, as it revealed full-year profits at RBI down five per cent year on year.
The Anglo-Dutch company confirmed this morning that a “restructuring programme” announced last February – aimed at saving £140m a year by 2011 – had now been extended to include RBI.
The New Scientist and Computer Weekly publisher had initially been excluded from the changes, because Reed Elsevier had intended to sell the division – but that was abandoned last December.
“The scope of the programme has now been expanded both to include the RBI business and to add further restructuring and consolidation opportunities which have been identified,” Reed Elsevier said in its end-of-year results this morning.
It said it hoped extending the restructuring project to RBI would deliver “additional targeted annual savings of $150m (£105m) by 2011”.
Reed Elsevier chief executive Sir Crispin Davis said the company still intended “in the medium term” to sell RBI when economic conditions improved.
“We were disappointed not to be able to sell Reed Business Information but the macro-economic environment and poor credit market conditions made it too difficult to structure a transaction on acceptable terms,” he said.
“While the short term outlook for RBI is very challenging, RBI is a high quality business, with a strong management team and a record of success in developing online services.”
Total revenues across RBI’s British, American and Dutch B2B titles rose nine per cent year on year to £987m in 2008.
But on a like-for-like basis – ignoring acquisitions, disposals and the effects of fluctuating foreign exchange rates between the pound, dollar and euro – RBI revenues fell one per cent and operating profits were down five per cent.
UK revenue was up four per cent to £306m, including a 12 per cent rise in online revenue, but like-for-like revenues in the last quarter of the year were down seven per cent due to the “deteriorating economic environment”.
The publisher’s profit margin fell 0.6 points to 12.8 per cent and Reed Elsevier said the outlook for RBI in 2009 was “challenging”.
“Advertising markets are significantly impacted by the global economic downturn, with slowing online revenue growth and accelerating print decline,” the company said.
“Adjusted operating margins will be adversely impacted by the revenue decline, which can be mitigated only in part by the significant cost savings from restructuring and other cost actions.”
Total group revenue for Reed Elsevier was up 16 per cent to £5.33bn – a seven per cent rise on a constant currency basis.
Its adjusted operating profit was £1.38bn – up 21 per cent year on year.