By Huw Jones
LONDON (Reuters) -London Stock Exchange Group reported preliminary income for 2023 at the higher end of guidance and confirmed plans to buy 1 billion pounds ($1.27 billion) in shares this year directly from Blackstone (NYSE:BX) 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.
LSEG bought Refinitiv for $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% of turnover at LSEG, which posted total income, excluding recoveries, of 8 billion pounds, up 7.8% and at the higher end of a 6-8% forecast, and slightly above an analyst consensus forecast it provided.
Adjusted operating profit hit 2.86 billion pounds, in line with expectations. Earnings per share were up 1.9% at 323.9 pence but below an analysts consensus of 328.2 pence.
LSEG shares were down 2% in morning trade.
RBC analysts said headline numbers reflected healthy ongoing revenue, but operating expenses at 1% 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 revenue countered by heavier operating expenses and a decline in the annual subscription value (ASV), 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.
LSEG said the collapse of Credit Suisse (SIX:CSGN) dented ASV, but the indicator still has underlying "strength and momentum".
Thomson Reuters, which owns Reuters News, has a minority shareholding in LSEG after the Refinitiv deal. LSEG also pays Reuters for news.
GLOBALLY COMPETITIVE PAY
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 $2 billion tie-up with Microsoft (NASDAQ:MSFT).
"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.
This month Sky News reported that Schwimmer could be in line for a multi-million pound pay rise, despite concerns in the City over the exchange's ability to compete with Wall Street after UK chip designer Arm opted to list in New York.
Bosses of exchanges and listed companies in the United States are typically paid more than CEOs in Britain.
"If London has an ambition to be a globally leading financial centre and to attract world class companies, that means it has to attract world class talent, it has to be globally competitive," Schwimmer told reporters in response to questions about his potential pay.
Schwimmer said preparation activity in LSEG's IPO pipeline is the heaviest in a "number of years", though this was no guarantee that all companies would actually list, given much hinges on the perceived macro economic outlook.
"There is no sense of complacency," Schwimmer said.
LSEG proposed 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%.
($1 = 0.7895 pounds)