Wolters Kluwer 2023 Half-Year
Report
Alphen aan den Rijn, August 2, 2023 – Wolters Kluwer, a
global leader in professional information, software solutions and
services, today releases its half-year 2023 results.
Highlights
- Guidance for 2023 reiterated.
- Margin to improve for the full year.
- Revenues €2,725 million, up 4% in constant currencies
and up 6% organically.
- Recurring revenues (82% of total revenues) up 7% organically;
non-recurring down 1% organically.
- Digital & services revenues (94% of total revenues) grew 6%
organically.
- Expert solutions (58% of total revenues) grew 7%
organically.
- Adjusted operating profit €711 million, down 4% in
constant currencies.
- Adjusted operating profit margin down 210 basis points to
26.1%, as anticipated.
- Margin reflects expected increase in personnel costs and
investments in innovation.
- Diluted adjusted EPS €2.17, up 6% overall and up 2% in
constant currencies.
- Adjusted free cash flow €495 million, down 2% in
constant currencies.
- Return on invested capital (ROIC) improved to
15.4%.
- Balance sheet remains strong with net-debt-to-EBITDA of
1.5x.
- Interim dividend €0.72 per share, set at 40% of prior
year total dividend.
- On track to complete 2023 share buyback of up to €1
billion.
Interim Report of the Executive
Board
Nancy McKinstry, CEO and Chair of the Executive Board,
commented: “We delivered 6% organic growth as continued
strong momentum in recurring revenues more than offset the
anticipated downturn in non-recurring revenue streams. Operating
costs and margins developed as expected and we remain confident of
delivering a full-year margin improvement. We made important
progress towards our strategic goals and are excited about pursuing
growth opportunities across the business. Around 50% of our digital
revenues are from products that leverage AI and we see generative
AI as another powerful tool to drive value for our customers.”
Key Figures – Six months ended June 30 |
€ million (unless otherwise stated) |
2023 |
2022 |
∆ |
∆ CC |
∆ OG |
Business performance – benchmark figures |
|
|
|
|
|
Revenues |
2,725 |
2,600 |
+5% |
+4% |
+6% |
Adjusted operating profit |
711 |
734 |
-3% |
-4% |
-3% |
Adjusted operating profit margin |
26.1% |
28.2% |
|
|
|
Adjusted net profit |
537 |
527 |
+2% |
-2% |
|
Diluted adjusted EPS (€) |
2.17 |
2.04 |
+6% |
+2% |
|
Adjusted free cash flow |
495 |
497 |
0% |
-2% |
|
Net debt |
2,466 |
2,203 |
+12% |
|
|
ROIC |
15.4% |
14.8% |
|
|
|
IFRS reported results |
|
|
|
|
|
Revenues |
2,725 |
2,600 |
+5% |
|
|
Operating profit |
632 |
640 |
-1% |
|
|
Profit for the period |
479 |
455 |
+5% |
|
|
Diluted EPS (€) |
1.93 |
1.76 |
+10% |
|
|
Net cash from operating activities |
681 |
666 |
+2% |
|
|
∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆
OG: % Organic growth. Benchmark figures are performance measures
used by management. ROIC is based on twelve-months rolling figures.
See Note 4 for a reconciliation from IFRS to benchmark
figures. |
Full-Year 2023 Outlook
We reiterate our group-level guidance for 2023 as shown in the
table below. We continue to expect the group-level adjusted
operating profit margin to increase in the fourth quarter of 2023
(compared to fourth quarter 2022) leading to a margin improvement
for the full year. Divisional guidance (below) has been recast to
reflect the new organizational structure.
Full-Year 2023 Outlook |
|
Performance indicators |
2023 Guidance |
2022 Actual |
Adjusted operating profit margin* |
26.1%-26.5% |
26.1% |
Adjusted free cash flow** |
Around €1,200 million |
€1,220 million |
ROIC* |
16.5%-17.0% |
15.5% |
Diluted adjusted EPS growth** |
High-single-digit |
8% |
*Guidance for adjusted operating profit margin and ROIC is in
reporting currency and assumes an average EUR/USD rate in 2023 of
€/$1.09. **Guidance for adjusted free cash flow and diluted
adjusted EPS is in constant currencies (€/$ 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 its 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 EPS1.
We include restructuring costs in adjusted operating profit. We
continue to expect 2023 restructuring costs to be in the range of
€10-€15 million (FY 2022: €6 million). We continue to expect
adjusted net financing costs2 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
2022: 22.6%). Capital expenditure is expected to be at the upper
end of our normal guidance range of 5.0%-6.0% of total revenues (FY
2022: 5.4%). We expect the full-year 2023 cash conversion ratio to
reduce to approximately 100% (FY 2022: 107%).
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
term. The impact of discontinuing activities in Russia and Belarus
is expected to be immaterial to the group’s consolidated financial
results in 2023.
2023 outlook by division (new five-division
structure)
Health: we continue to expect organic growth to
be in line with the prior year and the adjusted operating profit
margin to be stable.
Tax & Accounting: we expect organic growth
to be lower than in the prior year (FY 2022: 8% pro forma). The
adjusted operating profit margin is expected to decline slightly
compared to prior year (FY 2022: 32.6% pro forma).
Financial & Corporate Compliance: we expect
organic growth to be slightly lower than or in line with the prior
year (FY 2022: 4% pro forma) and the adjusted operating profit
margin to improve slightly (FY 2022: 36.7% pro forma).
Legal & Regulatory: we expect organic
growth to be in line with prior year (FY 2022: 4% pro forma) and
the adjusted operating profit margin to increase for the full year
(FY 2022: 14.5% pro forma).
Corporate Performance &
ESG: we expect organic growth to improve
slightly from the prior year (FY 2022: 12% pro forma) and the
adjusted operating profit margin to increase for the full year (FY
2022: 12.4% pro forma).
Progress against 2022-2024 strategy
At the start of 2022, we introduced our 2022-2024 strategic
plan, which has three strategic priorities:
- Accelerate
Expert Solutions: we are focusing our
investments on cloud-based expert solutions while continuing to
transform selected digital information products into expert
solutions. We are investing to enrich the customer experience of
our products by leveraging advanced data analytics.
- Expand Our
Reach: we are seeking to extend
organically into high-growth adjacencies along our customer
workflows and to adapt our existing products for new customer
segments. We plan to further develop partnerships and ecosystems
for our key software platforms.
- Evolve Core
Capabilities: we are enhancing our
central functions to drive excellence and scale economies, mainly
in sales and marketing (go-to-market) and in technology. We plan to
advance our environmental, social, and governance (ESG) performance
and capabilities and to continue investing in diverse and engaged
talent to support innovation and growth.
A more detailed discussion of our strategy and business model
can be found in our 2022 Annual Report, pages 6-7.
In the first half of 2023, we made important progress on our
strategic plans. Expert solutions, which include our software
products and certain advanced information solutions, accounted for
58% of total revenues (HY 2022: 56%) and grew 7% organically
(HY 2022: 9%). Software revenues accounted for 45% of total
revenues (HY 2022: 44%) and grew 7% organically (HY 2022: 9%).
Cloud software revenues accounted for 37% of total software
revenues and grew 15% (HY 2022: 20%). Today, around 50% of our
digital revenues are from products that leverage artificial
intelligence (AI) to drive enhanced value for our customers. We are
currently experimenting with the new generative AI models, testing
dozens of use cases, collaborating with several large customers,
and partnering with Microsoft and Google, while at the same time
following our responsible AI principles.
We also made progress on extending our reach into high growth
adjacencies and geographies. The new Corporate Performance &
ESG division, formed in March 2023, sets us on a path to extend our
enterprise software solutions into corporate workflows for ESG data
collection, analysis, reporting, and auditing. CCH Tagetik signed a
channel partnership with LTIMindtree to support further geographic
expansion. Health Learning Research & Practice launched
vrClinicals for Nursing in partnership with Laerdal Medical and the
National League for Nursing.
Last but not least, we have taken several major steps to evolve
our core capabilities this year. We made significant progress in
centralizing our product development teams, more than doubling the
number of FTEs in our global development organization, Digital
eXperience Group (DXG). We have created a single unified branding,
communications, and digital marketing function to support the
business globally. And we continued to advance towards our specific
ESG objectives by driving initiatives that enhance employee
engagement and belonging and executing on programs that reduce our
greenhouse gas emissions.
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
services.
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 20,900
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.
(WTKWY).
For more information, visit www.wolterskluwer.com, follow us on
Twitter, Facebook, LinkedIn, and YouTube.
Financial Calendar
August 29, 2023 |
Ex-dividend date: 2023 interim dividend |
August 30, 2023 |
Record date: 2023 interim dividend |
September 21, 2023 |
Payment date: 2023 interim dividend |
September 28, 2023 |
Payment date: 2023 interim dividend ADRs |
November 1, 2023 |
Nine-Month 2023 Trading Update |
February 21, 2024 |
Full-Year 2023 Results |
March 6, 2024 |
Publication of 2023 Annual Report |
Media |
Investors/Analysts |
Paul Lyon |
Meg Geldens |
External Communications
|
Investor Relations |
t + 44 (0)7765-391-824 |
t + 31 (0)172-641-407 |
press@wolterskluwer.com |
ir@wolterskluwer.com |
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
various countries.
1 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.2 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.
- 2023.08.02 Wolters Kluwer 2023 Half-Year Report
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