THE strength of sterling cut Reed Elsevier's interim profits by #36m and the Anglo-Dutch publisher warned yesterday of a similar hit in the second half.

Pre-tax profit rose only 1% to #419m in the first six months, but the company said profit would have increased 10% at constant exchange rates.

The profit figure was towards the bottom end of expectations and Reed's share price in London fell 5% as analysts trimmed their full-year earnings forecasts. The shares ended the day 40p lower at 590p.

Share analysts said Reed Elsevier, which has shed many of its consumer operations to focus on supplying specialist information in areas such as business and science, was well placed for future growth.

''Higher development costs and sterling are squeezing profits,'' said analyst Anthony de Larrinaga of broker Panmure Gordon.

''The underlying position is very healthy. They have the content, the management and the resources.''

The analyst cut his 1997 pre-tax profit forecast by #30m to #840m. Other analysts scaled back their estimates to the #830m-#840m range.

Almost two-thirds of Reed Elsevier's profit is derived from the dollar, Dutch guilder, Swiss franc and French franc but results are calculated in sterling.

Sales fell 1% to #1664m, although they were 6% higher at constant exchange rates.

The company said it remained ''positive'' about prospects for the rest of 1997 and the longer term.