LSEG reports consistent business-wide first-half growth

1st Aug 2024 09:30

(Sharecast News) - London Stock Exchange Group (LSEG) reported consistent growth across its divisions in its interim results on Thursday, alongside improved profitability and significant shareholder returns.

The FTSE 100 group's total income, excluding recoveries, rose by 5.4% on a reported basis to £4.2bn, with strong momentum in the second quarter driving a 7.8% increase in income.

Including recoveries, total income for the six months ended 30 June reached £4.39bn, up 5%.

LSEG's EBITDA for the period increased 9.6% to £1.94bn, reflecting strong operational performance, while operating profit grew 9% to £812m.

Profit before tax was ahead 4.7% at £693m.

On an adjusted basis, EBITDA rose 8.1% to £2.04bn, with an improved EBITDA margin of 48.5%, up 120 basis points from the prior year.

The increase in profitability was driven by a combination of underlying performance and favourable foreign exchange impacts.

Despite the gains, basic earnings per share (EPS) fell 16.2% to 64.7p, primarily due to higher non-underlying amortisation costs related to the Refinitiv acquisition and an increased reported tax rate.

Adjusted earnings per share, however, grew 8.1% to 174p, reflecting strong income growth, effective cost control, and a reduced share count.

The group said its divisions all performed well, with data and analytics income up 4.3%, FTSE Russell and risk intelligence both up 11.5%, and capital markets income increasing by 17.4%.

Post trade income remained stable following a strong performance in 2023.

The annual subscription value (ASV) rose 6.4% as of June, aligning with the company's guidance.

LSEG also made strategic progress in the half-year, including enhancements to its product offerings, such as new climate transition and multi-asset index products, and expanding low-latency feeds.

The group said its partnership with Dow Jones strengthened its news offerings, while joint product development with Microsoft remained on track, with the first products expected to be available in the second half.

Additionally, Tradeweb's acquisition of ICD positioned it to enter the corporate segment.

LSEG returned £1bn to shareholders through buybacks in the first half, targeting the holdings of the Blackstone consortium, whose stake in the group had now fallen below 2%.

The interim dividend was hiked 14.8% to 41p per share, with payment scheduled for 18 September.

Looking ahead, LSEG reiterated its medium-term guidance, expecting mid-to-high single-digit organic revenue growth annually, with acceleration anticipated after 2024.

The group also projected a continued increase in underlying EBITDA margins and a gradual reduction in capital expenditure as a percentage of income over time.

"We have finished the first half strongly, maintaining our momentum in the second quarter with every business line contributing to revenue growth," said chief executive officer David Schwimmer.

"This reflects the strength of our proposition, the improvements we have made to our products and the depth of our relationships with customers.

"Our high pace of innovation continues - we have made significant enhancements to Workspace, leading to several competitor displacements."

Schwimmer said the company was also building on its leadership in data, expanding its pricing and reference content "substantially" and adding over 70 new feeds to its low-latency data coverage.

"The recent strategic partnership with Dow Jones also brings leading breadth in news coverage.

"In FTSE Russell, we are seeing strong demand for our differentiated climate transition and multi-asset solutions.

"Our Post Trade Solutions businesses are gaining momentum, particularly in FX forwards optimisation."

Tradeweb meanwhile had an "outstanding" first half, David Schwimmer said, growing share in a strong marketplace.

"Our partnership with Microsoft is approaching commercialisation as the first product becomes more widely available by year-end.

"We are also delivering efficiency improvements, with underlying margin improving year-on-year despite ongoing investment, and we expect this trend to continue.

"We look forward to further progress in the second half of the year, and are reiterating all of our medium-term guidance."

At 1030 BST, shares in London Stock Exchange Group were up 4.12% at 9,860p.

Reporting by Josh White for Sharecast.com.