- Revenue lifted by data and analytics
- IPO pipeline ‘promising’ says CEO
- Shares drift to three-month low
Global financial and information firm London Stock Exchange Group (LSEG) failed to set investors’ pulses racing with its preliminary full-year results which showed revenues rising but profits falling.
The shares slid 224p or 2.5% to £86.88, their lowest level of the year so far.
DISAPPOINTING EARNINGS
For the 12 months to December, the group posted total income of £8.38 billion, an increase of 8.2% or 6.9% on an organic constant-currency basis.
Underlying income was up 7.8%, while ‘recoveries’ – which mainly relate to fees for third-party content, such as exchange data, sold directly to customers – jumped over 17% helping lift the headline rate.
Revenue from data and analytics, which makes up the bulk of income these days, rose by 7.3%, while capital markets revenue, which used to make up most of the business previously, increased by 6.1%, and post-trade revenue climbed 17.1%.
However, little of this growth appears to have fed through to the bottom line, with headline EPS (earnings per share) falling by 2% to 138.9p – putting the shares on 62 times earnings – and even adjusted earnings only rising by 1.9% to 323.9p per share.
Commenting on the markets and trading business, chief executive David Schwimmer admitted the last few years had been poor in terms of new listings, not just in the UK but globally, although he pointed to ‘a more promising IPO (initial public offer) pipeline’ for 2024.
Even the promise of a further £1 billion share buyback, on top of last year’s £1.2 billion repurchase and a 7.5% increase in the total dividend, failed to lift investors’ spirits.
EXPERT VIEW
Jefferies analyst Tom Mills suggested the group had achieved ‘exactly what it intended with these results, delivering an in-line set of numbers - across all key line items - that sets things up for a transitional 2024 (for which cons looks well-calibrated)’ before a much-anticipated acceleration from 2025.
While the buyback announcement was expected, it will be directed towards the Blackstone/Thomson Reuters consortium rather than the retail market although the effect will be the same.
