Wiley battered by impact of foreign exchange

Liz Thomson
News - International 10 Mar 2009

In New York, John Wiley & Sons has reported a 2% decline in Q3 revenues after adjusting for a $47m foreign exchange impact, most notable in the Professional/Trade business. Including the negative impact of forex, third quarter revenue decreased 13% to $374m. William J Pesce, President and CEO, said in a statement: 'As anticipated earlier in the year, the unfavourable effect of foreign exchange on Wiley's revenue and earnings is significant and unprecedented. In addition, economic conditions have had an adverse effect on our Professional/Trade business, particularly in the US. While the results in Professional/Trade are disappointing, it is encouraging that we have increased market share in key publishing categories. Our global STMS and Higher Education businesses are performing well. With one quarter to go in fiscal year 2009, we are reaffirming full-year EPS guidance of approximately 20% growth on a currency neutral basis and excluding the unusual tax benefit reported in the prior year. We are reducing revenue guidance from mid single digit growth to low single digit growth on a currency neutral basis, principally due to market conditions affecting our Professional/Trade business. Foreign exchange will continue to have a significant adverse affect on Wiley's revenue and EPS in the fourth quarter.'  


Global STMS revenue for Q3 declined 13% to $202m, mainly due to the $35m foreign exchange impact. On a currency neutral basis, revenue increased 2%. Direct contribution to profit for the third quarter fell 13% from the previous year to $75m. On an exchange neutral basis, contribution to profit was up 2%. During the first nine months of fiscal 2009, global STMS revenue was flat.
In Professional/Trade, revenue declined 14% and contribution to profit 25% on a currency neutral basis, results attributed to economic conditions, particularly a severely weakened retail environment. Global revenue in the sector declined 19% to $100m in Q3 compared to $123m in the previous year, or a 14% decrease, excluding unfavourable foreign exchange. For the first nine months, global P/T revenue declined 12% to $316m, a 10% decrease, again excluding foreign exchange. Year-to-date direct contribution to profit fell 26% to $77m, a 23% decrease on an exchange neutral basis.
Higher Education (HE)revenue increased 7%, with contribution to profit up 15% on currency neutral basis. But global HE revenue declined 2% to $72m in Q3, again due to foreign exchange. Revenue increased 7% on a currency neutral basis, driven by strong growth in most subject categories, with WileyPLUS performing well and growth in all regions bar Asia, which has been affected by devaluation of the Indian Rupee. Direct contribution to profit rose 2% to $29m, or 15% excluding unfavourable foreign exchange, and YTD global HE revenue grew 4% to $196m, or 8% taking in to account foreign exchange. Direct contribution to profit for the nine-month period rose 7% to $69m, or 13% on a currency neutral basis.

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