Growth for Reed in Australia, but company plans $250m global cutbacks

Reed Business Information’s Australian operations helped drive growth in the company in 2008, its owner Reed Elsevier said tonight in an update to the financial markets which also warned of a worse year ahead

Revenues at RBI, whose local titles include the likes of B&T, Australian Doctor, Encore and Money Management, held up well despite an on-off attempt to sell the company. However, the update says the outlook has worsened and a cost cutting drive is about to get under way.

Within RBI’s “international” division, covering Australia, Asia Pacific and parts of Europe, the company saw revenue growth of 2%, with online growth up by 26% and print down 4%.

Much of the online growth was driven by the rollout into several markets of the Hotfrog business directory, an online business created in Australia. The update added: “Online revenues now represent 25% of RBI International revenues.”

It said: “Asia Pacific saw 9% underlying revenue growth with strong Hotfrog sales and good growth in healthcare and construction in Australia.” But it warned: “Fourth quarter revenues were flat against the prior year.”

It went on: “The outlook for 2009 for Reed Business Information is challenging. Advertising markets are significantly impacted by the global economic downturn, with slowing online revenue growth and accelerating print decline. 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. In this difficult environment, the focus in RBI is on right sizing the cost base to match reduced revenue expectations whilst maintaining investments, particularly against our online franchises, to be strongly competitively positioned as markets recover.”

The company said that it was looking to make savings across RBI globally of US $160m (AUS$250m).

Reed Elsevier CEO Crispin Davis said: “Whilst 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. It remains our intention to divest RBI in the medium term when conditions are more favourable.”


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