The July 2001 acquisition of Harcourt's elhi and scientific, technical and medical publishing groups was the primary factor in driving up total revenues at Reed Elsevier by 22%, to nearly four billion euros ($3.54 billion), in the first six months of 2002. Adjusted pretax profits were down 3% in the period, to 641 million euros ($571 million) due mainly to weak results from the company's business group, where sales fell 20% and operating profit declined 17%. Reed chairman Morris Tabaksblat and CEO Crispin Davis said the company's six-month performance was on target and they expect a stronger second half of the year due to better results from the STM and education groups and easier comparisons in the business group.
The Harcourt purchase had the most dramatic impact on Reed's education group. Sales in the six-month period jumped 325%, to 723 million euros. Within the group, revenues in the U.S. schools and testing division skyrocketed by more than 1,000%, to 615 million euros, while international sales fell 8%, to 108 million euros. A pro forma comparison of the Harcourt education properties shows underlying growth of 1%, with sales in the elhi division down 3%, but with sales in the testing division ahead 14%.
STM group revenues rose 64%, to just over one billion euros, in the first half of the year, with sales in the health sciences division up 175%, to 399 million euros, while sales in the science and technology division increased 29%, to 604 million euros. Excluding the Harcourt business, sales were up 5% in the group, while pro forma sales of the Harcourt units rose 1%. Sales in the science group were driven by strong subscription renewals and the success of its online product ScienceDirect. Demand for online services is spurring growth across the division, Reed said.
In the legal group, total sales rose 5%, to 1.08 billion euros. Sales in North America were up 6%, to 860 million euros, and sales in the international market increased 3%, to 219 million euros. Online revenues increased 8% due to gains at smaller law firms, while sale of print and CD-ROM products were flat.
Revenues in the business group (which includes PW) fell 20% in the first half of the year, to 1.17 billion euros. A difficult advertising environment was cited as the reason for the decline. Excluding acquisitions and divestitures, revenues were down 9%.
