London (October 30, 2003) - Wolters Kluwer (Euronext Amsterdam: WKL), a leading multinational information services company based in the Netherlands, announced its new three-year strategy today, highlighting investments totalling €800 million to grow its leading market positions, structural cost reductions of €240 million and reorganization of its operations to integrate its business and to get closer to the customer. The company expects to reduce FTEs by 1,600 worldwide (8%) and to achieve annual sustained revenue growth of 3-4% and operating margins of 19-20% by 2007.
Nancy McKinstry, Wolters Kluwer's new Chairman, made the strategy announcement today during a meeting with investors and analysts in London. "We have worked hard to put the people and processes in place to execute our new strategy with rigor and discipline", she said.
"You can expect a deep sense of urgency from Wolters Kluwer management and a strong dedication to getting the job done. Ongoing discussions with customers in all our markets confirm that we have important, leading market positions that we can grow profitably. With the support of our Executive and Supervisory Boards and the strong commitment of Wolters Kluwer management and employees, I am convinced that our strategy will return us to solid growth and healthy margins."
"What is absolutely clear is that Wolters Kluwer has powerful assets and number one or two positions in 80 percent of its markets. These positions provide the foundation for growing our business, and we intend to work these assets smarter and harder. Therefore, the tighter integration of our operating units is needed. Our focus must be on disciplined, excellent management and a deep commitment to being in touch with our customers and doing everything necessary to meet their needs," McKinstry said.
The Professional's First Choice
Wolters Kluwer's vision is to be 'The Professional's First Choice in providing information, tools and solutions to help make their most critical decisions effectively and improve their productivity'.
Wolters Kluwer will focus on large markets, where it has leading and distinct positions. The growth plans are centered in three major areas; strengthen and expand customer relationships; deliver end-to-end solutions and invest in online growth and migration. "When we've focused on being responsive to our customers and delivering products that truly meet their needs, we've shown we can succeed," McKinstry said.
Tighter, customer focused organization
Wolters Kluwer will change fundamentally from a financial holding company to an operationally focused one. Five customer-facing divisions will replace the former cluster structure and the CEO of each division will report directly to McKinstry. The five divisions are: Health; Corporate & Financial Services; Tax, Accounting & Legal (USA and Asia Pacific); Legal, Tax & Regulatory Europe, and Education.
Under the new structure, each division has identified ways to grow market positions and to achieve efficiencies, by consolidating functions, decreasing management layers, and combining locations. Wolters Kluwer will invest only where it has demonstrable potential for growth and only where it can achieve returns above its weighted, average cost of capital.
Structural cost improvements
Wolters Kluwer will improve its cost base with sustainable cost reductions of €240 million from 2003 to 2006. From 2007 onwards, annualized savings will be €100 million. These cost savings will be realized by restructuring operations, streamlining back-office functions, developing shared services, and consolidating real estate holdings. Wolters Kluwer also will standardize technology platforms, consolidate data centres, and increase its cost flexibility with offshore development and IT outsourcing.
"We must focus on customers and developing products that meet market needs. Profitable growth also depends on restructuring our cost base and streamlining operations," said McKinstry.
Financial
Wolters Kluwer will repurchase outstanding bonds from its investors. Wolters Kluwer also intends to issue a new Euro denominated bond. The repurchase will utilise the Company's strong cash position to reduce total debt and, in conjunction with the intended new issue, prudently reduce the quantity of debt maturing in 2005 and 2006.
The company's dividend for 2003 will be €0.55 per ordinary share/depositary receipts, as it was in 2002.
McKinstry stated that third quarter results will be in line with expectations and reiterated the Company's outlook for 2003.
Confidence in the Future
From 2007 onwards, Wolters Kluwer expects annual revenue growth of 3-4%, with 45% of the revenues coming from electronic products and services. The operating margins will be improved to 19-20%.
McKinstry summarized, "We have planned the work and now we will work the plan. I have confidence in our strategy, and we are determined to succeed."
The full presentation (including web cast) to the investors/analyst meeting of October 30, 2003 in London is available through our website: www.wolterskluwer.com.
Forward-looking statement
This trading statement contains forward-looking statements. These statements may be identified by words such as 'expect', 'should', 'could', 'shall', and similar expressions. These statements are subject to risks and uncertainties, and actual results and events could differ materially from what is expected presently. Factors leading thereto may include without limitations general economic conditions, conditions in the markets in which Wolters Kluwer is engaged, behaviour of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting Wolters Kluwer's businesses.
Note for the editor
Wolters Kluwer (Euronext Amsterdam: WKL), is a leading multinational information services company based in the Netherlands. The company's core markets are Health, Tax, Accounting, Corporate & Financial Services, Legal/Regulatory and Education. Wolters Kluwer has annual revenues (2002) of more than €3.9 billion, employing almost 20,000 people and activities in Europe, North America, and Asia Pacific. Wolters Kluwer depositary receipts of shares are quoted on the Euronext Amsterdam and are included in the AEX and Euronext 100 indices.
Internet: www.wolterskluwer.com
Financial publication calendar: Trading update 3rd quarter - November 12, 2003 Preliminary figures full year 2003 - January 2004 Results full year 2003 - March 8, 2004
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