Publishing group Reed Intl. posted a 10% hike in pretax profits in the six months ending Sept. 30.
Reed also disclosed Friday that it and Dutch publisher Elsevier have finalized terms of their merger, announced Sept. 17.
Pretax profits of T94 million ($ 174 million at the exchange rate Reed used) on revenues of T758 million ($ 1.4 billion) surprised most analysts who had forecast T85 million to T92 million.
Peter Davis, Reed’s chairman, said he was encouraged by the results achieved during very difficult market conditions.
He reported operating profits increased in books, business-to-business publishing (which includes Cahners Publishing Co., parent of Variety and Daily Variety) and consumer publishing.
Cahners’ operating profit rose by $ 4.7 million (19%) but the weaker dollar pegged the sterling increase to 9%. Advertising volumes and yields showed a slight improvement over last year, although performance varied by sector.
Earnings per share increased by 8%, and Reed raised the interim dividend by 5 % to 5.5 pence.
Davis said he could not detect any signs of economic recovery, noting, “Only in U.S. business advertising has there been any upturn but this is relatively weak and the improvements … could be reversed if there is a setback to business confidence.”
Reed and Elsevier have revised the financial terms of their merger. They still will have essentially equal interests in the merged businesses, but Reed’s indirect interest in Elsevier will be about 5.8%, not the 11.5% originally envisioned. This reflects the fall in the value of sterling in relation to the Dutch guilder since the initial agreement in principle.
Proposed merger , which will create one of the world’s largest publishing and information groups, must be approved by the shareholders of both companies. Shareholders meetings are scheduled in London and Amsterdam on Nov. 17, enabling Reed Elsevier to be formed Jan. 1.