UPDATE 3-Wolters Kluwer lowers revenue growth outlook

(Adds spokeswoman comment, updates shares)

By Harro ten Wolde

AMSTERDAM, July 21 (Reuters) - Weaker demand for financial products led Europe's biggest legal and tax publisher, Wolters Kluwer NV, to cut its forecast for 2008 revenue growth on Monday, sending its shares as much as 6 percent lower.

The company said it now expected revenue in constant currencies and excluding the impact of acquisitions and divestments to grow by 3 percent, compared with a previous 4 percent growth outlook.

"The impact of recent market conditions in our non-subscription product lines, particularly within Corporate & Financial Services, requires that we adjust full-year organic revenue growth expectations," Wolters Kluwer Chief Executive Nancy McKinstry said in a statement.

Wolters Kluwer (WLSNc.AS) shares recovered to a 0.8 percent loss at 14.42 euros by 1202 GMT, in line with a 0.7 percent lower DJ Stoxx European media index .SXMP and after hitting 13.62 euros earlier. But the shares remained near a 4-1/2 year low set on July 15.

Analysts said the weakness in the financial sector was not surprising.

"We assumed this could be compensated by strong sales in Tax Accounting & Legal and Legal, Tax & Regulatory Europe, together accounting for more than 60 percent of total revenues," SNS Securities analyst Michel Veul said in a note.

"Due to the financial turmoil, our legal and financial clients in the United States postpone their spending on our one-off publications," Wolters Kluwer spokeswoman Caroline Wouters said, declining to give details.

Analysts at private bankers Theodoor Gilissen said they have been cautious regarding Wolters Kluwer's organic revenue growth prospects since early this year.

"And this will remain so for the time being," they said, adding that they preferred major peer Anglo-Dutch publisher Reed Elsevier (REL.L) (ELSN.AS) as it was less vulnerable to an economic slowdown.

The company, which generates about 66 percent of its revenues from subscription products, kept its outlook for 2008 earnings per share in constant currencies of 1.52 euros ($2.41) to 1.57 euros and for an earnings before interest, taxes and amortisation (EBITA) margin of 20 percent.

It also said it still expected free cash flow of about 400 million euros and a return on invested capital of 8 percent in 2008.

McKinstry said fundamentals of the company's recurring revenue business remained on track, with stable margins, improving retention rates, growth in higher-margin online and software products, and efficiencies resulting from earlier restructuring initiatives.

"These fundamentals are driving margin growth, strong cash flow, and double-digit earnings growth," she said.

In April, Wolters Kluwer told its annual meeting it was sticking to its guidance despite uncertain market conditions, expecting organic revenue growth to accelerate in the second half of 2008, driven by its publishing schedule and new product releases.