LSEG confirms £1 billion buyback after in-line 2023 earnings

LONDON Stock Exchange Group (LSEG) reported preliminary full year income for 2023 at the higher end of guidance, and confirmed plans to buy £1 billion (S$1.7 billion) in shares this year directly from Blackstone and Thomson Reuters.

“We continued our track record of broad-based growth, despite an uncertain environment, and delivered on all the targets we set at the time of the Refinitiv acquisition,” LSEG chief executive David Schwimmer said on Thursday (Feb 29).

LSEG bought Refinitiv for US$27 billion from Blackstone and Thomson Reuters three years ago, turning the 300-year-old exchange into a financial market data powerhouse to compete with leader Bloomberg.

“We look forward to further progress in 2024,” Schwimmer said in a results statement.

Data now represents 70 per cent of turnover at LSEG, which posted total income, excluding recoveries, of £8 billion, up 7.8 per cent from 2022, and at the higher end of a 6 to 8 per cent forecast, and slightly above an analyst consensus forecast it provided.

Adjusted operating profit hit £2.86 billion, in line with expectations. Earnings per share were 323.9 pence, up 1.9 per cent on 2022 and slightly below analysts consensus of 328.2 pence.

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LSEG shares fell 1.2 per cent in early trading.

RBC analysts said while headline numbers reflected healthy ongoing revenue, operating expenses at 1 per cent above expectations left profit figures very narrowly below consensus.

Citi analysts said in a note to clients that LSEG’s results were mixed, with better revenues countered by heavier operating expenses and a decline in the annual subscription value, a benchmark of recurring revenue.

“We continue to see long-term re-rating potential... but today’s results are unlikely to act as a catalyst,” Citi said.

Thomson Reuters, which owns Reuters News, has a minority shareholding in LSEG after the Refinitiv deal. LSEG also pays Reuters for news.

At a capital markets day in November, LSEG raised its mid-term growth guidance to “mid to high single digits” as it looks beyond the integration of Refinitiv to the benefits of its US$2 billion tie-up with Microsoft.

“In Data & Analytics, customers will shortly be using the first products from our partnership with Microsoft: together, we will transform how financial markets participants communicate, research, analyse data and trade,” Schwimmer said.

LSEG has come under the spotlight as British companies, including chip designer Arm Holdings, have opted to list in New York, raising concerns about London’s ability to attract international investors.

Schwimmer said there is an “encouraging” IPO pipeline for the London Stock Exchange.

LSEG is proposing a dividend of 79.3 pence per share added to the interim dividend of 35.7 pence, resulting in a total dividend of 115 pence per share, up 7.5 per cent. REUTERS