The difference in how two continents view the performance of their respective companies provides a great opportunity for introspection that will, in all likelihood, never see the light of day on lightweight market news reporter CNBC. But here at The Motley Fool, we find the numbers reported last week by Canada's premier professional publisher Thomson
Last week, Thomson reported that in 2004 it increased its revenues by 9% over 2003 levels and boosted profits by 15%. Result: A week later, Thomson is trading all of 2.6% higher than it did on the day before results were announced.
Meanwhile, over on "the Continent," Reed Elsevier has just published its own preliminary financials for fiscal 2004. The company didn't provide a whole lot of detail, but what it did tell us is that it grew revenues about half as fast as Thomson did (5%), and profits somewhere between 20% and 47% slower -- increasing them by 12% according to international accounting standards, or 8% on a pro forma basis. Result: Today, Reed Elsevier shares command a 7% premium to what they were trading for just yesterday.
Apparently, the fact that Reed Elsevier is both growing, and growing more profitable, at slower rates than its Canadian nemesis does not matter as much to the Europeans as the fact that Reed Elsevier is growing at all. If you'll recall, when we last checked in on Reed Elsevier, it had just posted a mid-year revenue decline and anemic 2.8% profits growth in comparison to the first half of 2003. According to company management, its lagging growth -- both in 2004's first half and overall for the year -- was caused primarily by the strength of its home currencies, the euro and pound sterling, in relation to the dollar. Doing half of its business in the U.S., and consequently collecting half of its revenues in deflated U.S. dollars, has proven to be a considerable drag on Reed Elsevier's results.
Back in Canada, Thomson faces considerably weaker exchange-rate headwinds. So why is it that its shares didn't get a boost last week, in proportion to the company's outperformance (and likely continued outperformance) of its rival? See Monday's article on Thomson for the answer.
For more Foolish news & commentary on these two publishing powerhouses, read:
- Thomson Prints Profits
- Thomson Closes the Books
- Reed Elsevier's Fine Print
- Publishers Dueling for No. 1
Fool contributor Rich Smith holds no position in either of the companies mentioned in this article.