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LexisNexis see profits fall by 15%

Reed Elsevier has reported underlying sales growth of 1% in its first half, calling it an “improved performance” after making “considerable progress”. But it has warned that “recovery will be gradual as conditions remain constrained in many of our markets”. The STM and law publisher recorded sales of £2.99bn for the 6 month period to 30th June, down 2% on the previous year. It made an adjusted operating profit of £758m, compared with £782m, made a year earlier. At Elsevier sales grew 1% to £955m, with adjusted operating profit up 5% at £319m. At Lexis Nexis sales fell 1% to £1.3bn, with adjusted operating profits down 15% to £280m. At Reed Exhibitions sales grew 8% to £383m, with adjusted operating profit of £123m, up 3%. At Reed Business Information sales fell 19% to £374m, with profits up 3% at £40

Reed Elsevier’s chief executive officer, Erik Engstrom, said: “We have made considerable progress in the first half against our business priorities.  Subscription renewals in our science and medical business have been completed in line with our expectations in a difficult academic budget environment.  Within LexisNexis, we have sharpened our focus on the legal and risk solutions businesses in their respective markets; good progress has been made in the development of the next generation of our legal products and supporting infrastructure; strong products are driving growth in risk solutions…While we have seen an improvement in the general economic environment and the actions we are taking are beginning to bear fruit, recovery will be gradual as conditions remain constrained in many of our markets.”

9 replies on “LexisNexis see profits fall by 15%”

OK, on the face of it there's something very wrong at LN. A 1% fall in turnover to £1300M means £13.13M there or thereabouts. A 15% fall in operating profit to £280M means £49.41M there or thereabouts. Someone at the helm needs to do either and/or the following.
Reduce costs……
Increase margins……
Reducing costs will mean at not very jolly Christmas for LN folk.
Increasing margin (in a price sensitive market) means reducing cost of sale which for LN means sales commissions or margins given to third party vendors….
But looking on the bright side, there is a long way to go before IRIS considers making a bid for LN/RE.

By reduce cost you mean get rid of loads of people that made product like Visualfiles a success then the answer is yes they have been at it for past 2 years.

“good progress has been made in the development of the next generation of our legal products and supporting infrastructure”
This reads more like investing for future strength rather than cost cutting with a view to maximising short term profit?

I refer my learned colleague to the words spoken by Mandy Rice Davies. “Well he would, wouldn't he”.

This reflects serious underlying problems at LN which have been masked in recent years by high price rises.

Or reduce the margin “given away” to third party vendors of LN products by selling direct? I am surprised LN haven't done that yet, then again I am surprised that Autonomy iManage haven't woken up to that one as well.

That'll be someone who is not a fan of Tikit then ? – CC

You could have a point but if you take away the profit attributable to the fall in revenue from the fall in operating profit you are left with 36m. Now that does not reconcile with what is suspected to be happening at LN. i.e. they are not investing an additional 36m in the “development of the next generation of legal products” and people are leaving either voluntarily or involuntarily.
The point about cost cutting to maximise short term profit however is a good one. To expand on that a little further, you remove the people who provide the indirect service value and your short term profits are steady on falling non recurring headline revenue (product licences). However then what happens over the medium term is that the range of services offered to your client base shrinks and the perceived value of your remaining services is impaired and your recurring maintenance contract revenue starts to walk.

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