AMSTERDAM - Wolters Kluwer NV, Europe's largest tax and legal publisher, aims to expand in China through partnerships as consolidation in professional publishing is accelerating in the country, Chief Executive Officer Nancy McKinstry said.
The company will look for partnerships in China in the legal, medical, tax and accounting fields, McKinstry said in an interview in Amsterdam. Legal publishing in China is a priority for Wolters Kluwer as the number of lawyers in the country is predicted to grow from the current 170,000 to 2 million in 2020, she said. The next priority is medical information, McKinstry added.
This year, the company announced a joint venture with China drug-information provider Medicom to deliver clinical-decision support to doctors as the country prepares for changes to its healthcare system.
While the company is primarily focused on organic growth to expand its geographical coverage, Wolters Kluwer is also looking for acquisitions to fill out its existing businesses, said McKinstry. Examples include the acquisition of LexisNexis Deutschland from Reed Elsevier NV, to expand in online legal services in Germany; and the acquisition of regulatory reporting and risk-management business FRSGlobal, to enter a faster-growing segment of an existing market.
On Wednesday, the company predicted diluted ordinary earnings per share at 1.5 euros ($2.1) to 1.55 euros in 2011, from 1.48 euros in 2010, and a margin for earnings before interest, taxes and amortization of 20.5 percent to 21 percent, from 20.4 percent.
"The outlook looks a bit conservative to me and investors seem disappointed about the relatively low growth and margin improvement that is in the guidance for 2011," said Maurits Heldring, an analyst at ABN Amro, who predicted earnings per share of 1.50 euros to 1.60 euros in 2011.
On Wednesday, Wolters Kluwer fell as much as 3.5 percent to 16.62 euros in Amsterdam trading, the biggest intraday drop since July. The stock traded at 16.76 euros as of 5 pm in Amsterdam on Wednesday.
Net income jumped to 288 million euros in 2010 from 118 million euros in 2009, as amortization of publishing rights and impairments declined to 175 million euros from 368 million euros. Revenue advanced 3.8 percent to 3.56 billion euros.
Wolters Kluwer expects to improve profitability in 2011 as the economic recovery takes hold and the company has a better mix of products and global geographical spread, McKinstry said.
The chief executive officer said the company still has challenges in managing the decline of print products as customers continue to migrate to applications for mobile devices, laptops and tablet computers, and in driving growth through online, software and service offerings.
By 2012, about 75 percent of total revenue should come from online, software and services. The current figure is around 70 percent, McKinstry said. The company will invest 8 percent to 10 percent of revenue in new products and platforms to drive growth, the chief executive officer said.
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