Wolters Kluwer First-Quarter 2023 Trading Update
Wolters Kluwer First-Quarter 2023 Trading
Alphen aan den Rijn, May 3, 2023 – Wolters Kluwer, a
global leader in professional information, software solutions and
services, today releases its first-quarter 2023 trading
- Full-year 2023 guidance reiterated.
- First-quarter revenues up 5% in constant currencies and
up 6% organically.
- Recurring revenues (82%) up 7% organically; non-recurring
revenues up 2% organically.
- Digital & services revenues (94%) grew 7% organically;
print revenues declined 5% organically.
- Expert solutions revenues (58%) grew 7% organically.
- First-quarter adjusted operating profit margin
decreased 270 basis points.
- Personnel costs and personnel-related expenses increased, as
- First-quarter adjusted free cash flow decreased 23% in
constant currencies, mainly due to lower working capital inflows
related to timing of payments.
- Net debt-to-EBITDA was 1.3x as of March 31,
- Progress on 2023 share buyback: €303 million of
intended share buyback of up to €1 billion completed in the year
through May 1, 2023.
Nancy McKinstry, CEO and Chair of the Executive Board,
commented: “We have seen a good start to the year, with
performance broadly as expected. Product investment has been
sustained at high levels as we continue to pursue opportunities for
organic growth while enhancing our solutions for customers. The
creation of a fifth division, Corporate Performance & ESG, was
implemented in March and our teams around the world are focused on
executing on our strategy. We are confident in reiterating our
guidance for full-year 2023.”
First-quarter 2023 developments
First-quarter revenues increased 5% in constant currencies,
reflecting organic growth of 6% (1Q 2022: 8%), partly offset by the
impact of net divestitures. In the first quarter, the average
EUR/USD rate was favorable (averaging 1.07 in 1Q 2023 versus 1.12
in 1Q 2022). Recurring revenues (82% of revenues), which include
subscriptions and other repeating revenue streams, increased 7%
organically (1Q 2022: 8%). Non-recurring revenues (18% of revenues)
rose 2% organically, marking an expected slowdown from a year ago
(1Q 2022: 9%). Of non-recurring revenues, Governance, Risk &
Compliance transactional revenues declined 1% organically (1Q 2022:
1% increase). Print book trends were mixed. Other non-recurring
revenues, mainly comprised of on-premise software licenses and
implementation fees, rose 2% organically against a tough comparable
(1Q 2022: 14% organic growth). The adjusted operating profit margin
declined 270 basis points in the first quarter, reflecting the
expected increase in personnel costs and personnel-related expenses
such as office and travel costs.
In March, we implemented the new five-division structure
announced on February 22, 2023. The discussion below still follows
the previous four-division reporting structure. Pro forma
historical figures for the five divisions will be provided in
advance of our half-year 2023 report.
Health revenues grew 5% organically (1Q 2022:
9%). Clinical Solutions grew 6% organically (1Q 2022: 9%), led by
our clinical decision support solution, UpToDate, and patient
engagement solution, Emmi. Clinical drug information revenues
returned to mid-single digit organic growth. Learning, Research
& Practice grew 3% organically against a challenging comparable
(1Q 2022: 9%). Digital subscription revenues for medical
research and nursing solutions grew 4% organically, while print
books, journal advertising, and other non-recurring revenues
Tax & Accounting revenues grew 11%
organically (1Q 2022: 9%). Our North American professional Tax
& Accounting business sustained double-digit organic growth,
mainly driven by cloud software, including the CCH Axcess suite.
The North American business benefitted from continued strength of
outsourced professional services and a favorable print book
publishing schedule. Professional Tax & Accounting in Europe
and Asia Pacific both recorded a strong start to the year. Our
Corporate Performance unit, comprising CCH Tagetik and U.S.
Corporate Tax, recorded accelerated double-digit organic growth,
supported by strong performance in cloud software and services
across all major global regions.
Governance, Risk & Compliance revenues were
flat on an organic basis against a tough comparable
(1Q 2022: 8%), largely as expected. A 6% decline in
non-recurring revenues (37% of division revenues) was offset by 4%
organic growth in recurring revenues. In Legal Services, organic
growth was 2% (1Q 2022: 7%), as solid growth in recurring
subscriptions was partly offset by a 2% organic decline in Legal
Services transactional revenues. In Financial Services, organic
revenues declined 3% (1Q 2022: organic growth of 8%), as momentum
in recurring revenues slowed and non-recurring revenues declined.
Lien Solutions and mortgage transaction volumes declined while
on-premise software license and implementation fees were lower than
a year ago.
Legal & Regulatory revenues grew 7%
organically (1Q 2022: 6%). Legal & Regulatory Information
Solutions (74% of divisional revenues) delivered stable 3% organic
growth (1Q 2022: 3%), as digital and services subscriptions
increased 8% organically (1Q 2022: 7%), more than compensating for
a decline in training and other non-recurring products. The Enablon
EHS/ORM1 platform delivered double-digit organic growth in both
recurring cloud subscriptions and non-recurring software license
fees in the quarter. In constant currencies, divisional revenues
declined 3% due to the divestment on November 30, 2022, of legal
publishing assets in France and Spain.
Cash flow and net debt
First-quarter adjusted free cash flow declined 23% in constant
currencies, due to lower working capital inflow in the quarter as a
result of timing of payments. In addition, capital expenditure
increased due to investments in innovation. Paid financing cost and
paid tax were lower than a year ago. Net cash spend on acquisitions
was €24 million, mainly related to the acquisition of NurseTim
on January 9, 2023. A total of €230 million in cash was
deployed towards share repurchases during the quarter.
As of March 31, 2023, net debt was €2,227 million, compared to
€2,253 million at December 31, 2022. Net-debt-to-EBITDA, based on
rolling twelve-month EBITDA, was 1.3x at the end of March 2023,
compared to 1.3x at year-end 2022. As of March 31, 2023, the number
of issued ordinary shares outstanding (excluding 10.5 million
shares held in treasury) was 247.0 million.
In early April, we issued a new €700 million Eurobond with an
8-year term and 3.750% annual coupon.
Dividends and share buybacks
In the year to date (through May 1), Wolters Kluwer has
repurchased 2.8 million ordinary shares for a total consideration
of €303 million (average share price €109.22). This includes a
block trade of €43.5 million executed on February 23, 2023, to
offset the dilution caused by our incentive share issuance.
For the period starting May 4, 2023, up to and including July
31, 2023, we have engaged a third party to execute
€200 million in share buybacks on our behalf, within the
limits of relevant laws and regulations (in particular Regulation
(EU) 596/2014) and Wolters Kluwer’s Articles of Association. Share
repurchases will be used for capital reduction purposes and to meet
obligations arising from share-based incentive plans.
At the Annual General Meeting to be held on May 10, 2023,
shareholders will be asked to approve a total dividend of €1.81
over financial year 2022, an increase of 15% compared to the 2021
dividend. If approved, the final dividend of €1.18 per share will
be paid to shareholders on June 6, 2023 (ADRs: June 13, 2023). The
interim dividend for 2023 will be set at 40% of the 2022 total
In the first quarter, we made progress in advancing our ESG
performance. In the area of human capital, we continued efforts to
attract and retain talent and to support employee engagement and
belonging. A range of initiatives around training and career
development are planned for 2023. Efforts to reduce our Scope 1 and
Scope 2 emissions continued, with our global real estate team on
track to deliver a further reduction in absolute square meters of
office space in 2023. Our program of decommissioning on-premise
servers continued as we migrated applications and customers to
energy-efficient cloud platforms. As reported previously, in early
2023, we submitted near-term targets to the Science Based Targets
initiative (SBTi) for validation, to reduce absolute Scope 1 and 2
greenhouse gas (GHG) emissions by 50% and absolute Scope 3 GHG
emissions by 30% by the year 2030 from a 2019 base year. We are
continuing our review of the new EU Corporate Sustainability
Reporting Directive (CSRD) in preparation for its application in
Full-year 2023 outlook
Our guidance for 2023 is provided below. We continue to expect
full-year organic growth to be in line with the prior year and the
adjusted operating profit margin to improve. We continue to expect
first half 2023 organic growth to be slower compared to the prior
year period, most notably in Governance, Risk & Compliance and
Health. We continue to expect the adjusted operating margin to
decline in the first half before improving in the second half.
Full-year 2023 outlook
Adjusted operating profit margin*
Around €1,200 million
Diluted adjusted EPS growth**
*Guidance for adjusted operating profit margin and ROIC is in
reporting currency and assumes an average EUR/USD rate in 2023 of
€/$1.07. **Guidance for adjusted free cash flow and diluted
adjusted EPS is in constant currencies (€/$ 1.05). Guidance
reflects share repurchases of €1 billion in 2023.
If the current U.S. dollar rate persists, currency will have a
slightly negative effect on full-year 2023 results reported in
euros. In 2022, Wolters Kluwer generated over 60% of revenues and
adjusted operating profit in North America. As a rule of thumb,
based on our 2022 currency profile, each 1 U.S. cent move in the
average €/$ exchange rate for the year causes an opposite change of
approximately 3 euro cents in diluted adjusted EPS2.
We include restructuring costs in adjusted operating profit. We
expect 2023 restructuring costs to be in the range of €10-€15
million (FY 2022: €6 million).
We expect adjusted net financing costs3 in constant currencies
to be approximately €40 million. We expect the benchmark tax rate
on adjusted pre-tax profits to be in the range of 23.0%-24.0% (FY
Capital expenditure is expected to increase but to remain within
our normal range of 5.0%-6.0% of total revenues (FY 2022: 5.4%). We
expect full-year cash conversion ratio to be approximately 100% (FY
Our guidance assumes no additional significant change to the
scope of operations. We may make further acquisitions or disposals
which can be dilutive to margins, earnings, and ROIC in the near
The impact of discontinuing activities in Russia and Belarus is
expected to be immaterial to the consolidated financial results in
2023 Outlook by division
Health: we expect full-year organic growth to
be in line with prior year and the full-year adjusted operating
profit margin to be stable.
Tax & Accounting: we expect full-year
organic growth to be in line with prior year and the full-year
adjusted operating profit margin to be stable.
Governance, Risk & Compliance: we expect
full-year organic growth to be in line with prior year and the
full-year adjusted operating profit margin to improve modestly.
Legal & Regulatory: we expect full-year
organic growth to be in line with prior year and full-year adjusted
operating profit margin to improve modestly.
About Wolters Kluwer
Wolters Kluwer (EURONEXT: WKL) is a global leader in
information, software solutions and services for professionals in
healthcare; tax and accounting; financial and corporate compliance;
legal and regulatory; corporate performance and ESG. We help our
customers make critical decisions every day by providing expert
solutions that combine deep domain knowledge with technology and
Wolters Kluwer reported 2022 annual revenues of €5.5 billion.
The group serves customers in over 180 countries, maintains
operations in over 40 countries, and employs approximately 20,500
people worldwide. The company is headquartered in Alphen aan den
Rijn, the Netherlands.
Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and
are included in the AEX and Euronext 100 indices. Wolters Kluwer
has a sponsored Level 1 American Depositary Receipt (ADR) program.
The ADRs are traded on the over-the-counter market in the U.S.
For more information, visit www.wolterskluwer.com, follow us on
Twitter, Facebook, LinkedIn, and YouTube.
Financial calendarMay 10, 2023
Meeting of ShareholdersMay 12, 2023
Ex-dividend date: 2022 final
dividendMay 15, 2023
Record date: 2022 final dividendJune 6,
Payment date: 2022 final dividend ordinary sharesJune
date: 2022 final dividend ADRsAugust 2,
2023 ResultsAugust 29,
date: 2023 interim dividendAugust 30,
date: 2023 interim dividendSeptember 21,
2023 Payment date: 2023
interim dividendSeptember 28,
2023 Payment date: 2023
interim dividend ADRsNovember 1, 2023
Nine-Month 2023 Trading UpdateFebruary 21, 2024
Full-Year 2023 ResultsMarch 6,
of 2023 Annual Report
Investors/AnalystsGerbert van Genderen
Investor Relationst + 31 (0)172 641
+ 31 (0)172 641
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Forward-looking statements and other important legal
informationThis report contains forward-looking
statements. These statements may be identified by words such as
“expect”, “should”, “could”, “shall” and similar expressions.
Wolters Kluwer cautions that such forward-looking statements are
qualified by certain risks and uncertainties that could cause
actual results and events to differ materially from what is
contemplated by the forward-looking statements. Factors which could
cause actual results to differ from these forward-looking
statements may include, without limitation, general economic
conditions; conditions in the markets in which Wolters Kluwer is
engaged; conditions created by global pandemics, such as COVID-19;
behavior of customers, suppliers, and competitors; technological
developments; the implementation and execution of new ICT systems
or outsourcing; and legal, tax, and regulatory rules affecting
Wolters Kluwer’s businesses, as well as risks related to mergers,
acquisitions, and divestments. In addition, financial risks such as
currency movements, interest rate fluctuations, liquidity, and
credit risks could influence future results. The foregoing list of
factors should not be construed as exhaustive. Wolters Kluwer
disclaims any intention or obligation to publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.Elements of this press
release contain or may contain inside information about Wolters
Kluwer within the meaning of Article 7(1) of the Market Abuse
Regulation (596/2014/EU). Trademarks referenced are owned by
Wolters Kluwer N.V. and its subsidiaries and may be registered in
1 EHS/ORM = environmental, health & safety and operational
risk management.2 This rule of thumb excludes the impact of
exchange rate movements on intercompany balances, which is
accounted for in adjusted net financing costs in reported
currencies and determined based on period-end spot rates and
balances.3 Adjusted net financing costs include lease interest
charges. Guidance for adjusted net financing costs in constant
currencies excludes the impact of exchange rate movements on
currency hedging and intercompany balances.
- 2023.05.03 Wolters Kluwer First-Quarter 2023 Trading
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