In its last earnings statement before Crispin Davis takes over as chief executive, Reed Elsevier said he would have carte blanche to make whatever changes are necessary to restore growth.
The company said in June that profit would be hurt by stronger competition for its legal information service Lexis-Nexis. That followed a March warning that weaker sales in its scientific and business publications, problems that depressed profit last year, would continue this year. Today, the company added that second-half profit would also be flat.
"They are under very heavy profit pressure on the professional side, including Lexis-Nexis," said David Adair, an analyst with HSBC Securities. "Long term, the company still has serious problems."
The shares fell 12 per cent after the news. The Anglo-Dutch company said profit from operations fell to pounds 276 million from pounds 307 million a year earlier. Pre-tax profit dipped 10 per cent to pounds 371 million, from pounds 413 million.
For Reed International, which owns 52.9 per cent of Reed Elsevier, earnings per share fell 10 per cent to 12.8p from 14.2p a year earlier. Earnings per share at Elsevier, which owns the remaining 47.1 per cent, dropped 12 per cent to 0.64 guilder (19p) from 0.73.
On 20 July Reed Elsevier named Mr Davis chief executive, ending a search that began a year ago and which included the announcement last April of failed negotiations with an earlier candidate.
Mr Davis, chief executive of independent advertising time-buying company Aegis Group, will review the entire Reed Elsevier operation, reporting back with a plan next March when Reed Elsevier reports full-year earnings.