Wolters Kluwer 2024 Half-Year Report
Wolters Kluwer 2024 Half-Year
Report
Alphen aan den Rijn, July 31, 2024 – Wolters Kluwer, a
global leader in professional information, software solutions and
services, today releases its half-year 2024 results.
Highlights
- Group-level guidance for 2024 reiterated.
- Revenues €2,891 million, up 6% in constant currencies
and up 6% organically.
- Recurring revenues (82% of total revenues) grew 7%
organically.
- Expert solutions (59% of total revenues) grew 8%
organically.
- Cloud software (18% of total revenues) grew 16%
organically.
- Adjusted operating profit €765 million, up 8% in
constant currencies.
- Adjusted operating profit margin up 40 basis points to
26.5%.
- Diluted adjusted EPS €2.36, up 9% overall and up 11% in
constant currencies.
- Adjusted free cash flow €445 million, down 10% in
constant currencies.
- Lower cash conversion partly reflects timing of large vendor
payments.
- Net-debt-to-EBITDA of 1.6x; Return on invested capital
(ROIC) improved to 17.5%.
- Interim dividend €0.83 per share, set at 40% of prior
year total dividend.
- On track to complete 2024 share buyback of €1
billion.
- Wolters Kluwer Tax & Accounting to acquire European
software solutions for €325 million.
Interim Report of the Executive
Board
Nancy McKinstry, CEO and Chair of the Executive Board,
commented: “We sustained organic growth of 6% in the
first six months and improved our adjusted operating profit margin
while increasing product investment. Several of our largest
solutions have introduced enhancements that harness the power of
generative AI to bring greater value and efficiency to
customers. We also invested in rolling out solutions that
support customers with new regulations, such as the U.S. Corporate
Transparency Act and the E.U. Corporate Sustainability Reporting
Directive. I am pleased to report that we are on track to meet our
2024 guidance.”
Key Figures – Six months ended June 30 |
€ million (unless otherwise stated) |
2024 |
2023 |
∆ |
∆ CC |
∆ OG |
Business performance – benchmark figures |
|
|
|
|
|
Revenues |
2,891 |
2,725 |
+6% |
+6% |
+6% |
Adjusted operating profit |
765 |
711 |
+8% |
+8% |
+7% |
Adjusted operating profit margin |
26.5% |
26.1% |
|
|
|
Adjusted net profit |
566 |
537 |
+5% |
+7% |
|
Diluted adjusted EPS (€) |
2.36 |
2.17 |
+9% |
+11% |
|
Adjusted free cash flow |
445 |
495 |
-10% |
-10% |
|
Net debt |
2,932 |
2,466 |
+19% |
|
|
ROIC |
17.5% |
15.4% |
|
|
|
IFRS reported results |
|
|
|
|
|
Revenues |
2,891 |
2,725 |
+6% |
|
|
Operating profit |
690 |
632 |
+9% |
|
|
Profit for the period |
509 |
479 |
+6% |
|
|
Diluted EPS (€) |
2.12 |
1.93 |
+10% |
|
|
Net cash from operating activities |
622 |
681 |
-9% |
|
|
∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.08); ∆
OG: % Organic growth. Benchmark figures are performance measures
used by management. ROIC is based on twelve-months rolling figures.
See Note 3 for a reconciliation from IFRS to benchmark
figures. |
Full-Year 2024 Outlook
Our group-level guidance for 2024 is unchanged. See table below.
We expect sustained good organic growth in 2024, in line with the
prior year, and a further increase in the adjusted operating profit
margin.
Full-Year 2024 Outlook |
Performance indicators |
2024 Guidance |
2023 Actual |
Adjusted operating profit margin* |
26.4%-26.8% |
26.4% |
Adjusted free cash flow** |
€1,150-1,200 million |
€1,164 million |
ROIC* |
17%-18% |
16.8% |
Diluted adjusted EPS growth** |
Mid- to high single-digit |
12% |
*Guidance for adjusted operating profit margin and ROIC is in
reporting currency and assumes an average EUR/USD rate in 2024 of
€/$1.08. **Guidance for adjusted free cash flow and diluted
adjusted EPS is in constant currencies (€/$ 1.08). Guidance
reflects share repurchases of €1 billion in 2024. |
In 2023, Wolters Kluwer generated over 60% of its revenues and
adjusted operating profit in North America. As a rule of thumb,
based on our 2023 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
expect restructuring costs to be in the range of €10-15 million (FY
2023: €15 million). We now expect adjusted net financing
costs2 in constant currencies to be approximately €55
million (previous guidance €60 million). We continue to expect the
full-year benchmark tax rate on adjusted pre-tax profits to be in
the range of 23.0%-24.0% (FY 2023: 22.9%).
Capital expenditures are expected to be near the upper end of
our guidance range of 5.0%-6.0% of total revenues (FY 2023: 5.8%).
We continue to expect the full-year cash conversion ratio to be
around 95% (FY 2023: 100%) due to lower net working capital
inflows.
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.
2024 outlook by division
Our guidance for full-year 2024 organic revenue growth by
division is summarized below. We now expect the increase in group
adjusted profit margin to be driven by our Finance & Corporate
Compliance, Legal & Regulatory, and Corporate Performance &
ESG divisions.
Health: we continue to expect full-year 2024
organic growth to be in line with prior year (FY 2023: 6%). The
division margin is now expected to be stable due to one-time
write-offs to streamline the portfolio.
Tax & Accounting: we
continue to expect full-year 2024 organic growth to be slightly
below prior year (FY 2023: 8%) due to slower growth in
non-recurring revenues and the absence of one-time favorable events
in Europe. The division margin is expected to decline slightly due
to increased product investment.
Financial & Corporate
Compliance: we now expect full-year 2024
organic growth to be higher than prior year (FY 2023: 2%) as
transactional revenue trends continue to stabilize.
Legal & Regulatory: we
continue to expect full-year 2024 organic growth to be in line with
prior year (FY 2023: 4%).
Corporate Performance &
ESG: we now expect full-year 2024 organic
growth to be in line with or slightly higher than in the prior year
(FY 2023: 9%) as Finance, Risk & Reporting revenues
stabilize.
Progress against 2022-2024 strategy
In the first half of 2024, we continued to execute on the three
priorities of our current strategic plan:
- 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 and artificial intelligence.
- Expand Our
Reach: we are seeking to extend into
high-growth adjacencies along our customer workflows and to adapt
our existing products for new customer segments. We are working to
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 sustainability and 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 2023 annual report.
Expert solutions, which include our software products
and certain advanced information solutions, reached 59% of total
revenues in the first half (HY 2023: 58%) and grew 8% organically
(HY 2023: 7%). We made progress on further enhancing our expert
solutions with artificial intelligence including generative AI
(GenAI). As of July 2024, all five divisions have solutions in
market that leverage GenAI, with more in the pipeline.
We expanded our market reach in several areas through organic
development: in Health, we expanded our entry into the nursing test
preparation market with Lippincott Ready for NCLEX3 and
we launched a solution to help healthcare providers streamline the
risk adjustment process with Health Language Coder Workbench. In
Finance & Corporate Compliance, we introduced an innovative
BOI4 platform to support customers with the U.S.
Corporate Transparency Act (CTA). In Legal & Regulatory, we
launched LegalCollaborator, a module that integrates with ELM’s
Passport and TyMetrix 360 to enable an efficient and transparent
process for law firm comparison and selection. And, in Corporate
Performance & ESG, we extended further into the corporate ESG
reporting market by adding scope 3 carbon emissions reporting
capabilities to the CCH Tagetik ESG & Sustainability
module.
Finally, having brought together core capabilities in product
development, finance, digital marketing, branding, and
communications over the course of the past two years, we are now
focused on driving scale economies and operational excellence in
these centralized functions.
Financial policy, capital allocation, net debt, and
liquidity
Wolters Kluwer uses its free cash flow to invest in the business
organically and through acquisitions, to maintain optimal leverage,
and to provide returns to shareholders. We regularly assess our
financial position and evaluate the appropriate level of debt in
view of our expectations for cash flow, investment plans, interest
rates, and capital market conditions. While we may temporarily
deviate from our leverage target, we continue to believe that, in
the longer run, a net-debt-to-EBITDA ratio of around 2.5x remains
appropriate for our business given the high proportion of recurring
revenues and resilient cash flows.
Dividend policy and interim dividend 2024
Wolters Kluwer remains committed to a progressive dividend
policy, under which we aim to increase the dividend per share in
euros each year, independent of currency fluctuations. The payout
ratio5 can therefore vary from year to year. Proposed
annual increases in the dividend per share consider our financial
performance, market conditions, and our need for financial
flexibility. The policy takes into account the characteristics of
our business, our expectations for future cash flows, and our plans
for organic investment in innovation and productivity, or for
acquisitions. We balance these factors with the objective of
maintaining a strong balance sheet.
Shareholders can choose to reinvest both interim and final
dividends by purchasing additional Wolters Kluwer shares through
the Dividend Reinvestment Plan (DRIP) administered by ABN AMRO Bank
N.V.
Progress on 2024 share buyback
As a matter of policy since 2012, Wolters Kluwer will offset the
dilution caused by our annual incentive share issuance with share
repurchases (Anti-Dilution Policy). In addition, from time to time
when appropriate, we return capital to shareholders through share
buyback programs. Shares repurchased by the company are added to
and held as treasury shares and are either cancelled or utilized to
meet future obligations arising from share-based incentive
plans.
On February 21, 2024, we announced our intention to repurchase
shares for up to €1 billion during 2024. So far this year, up to
and including July 30, 2024, we have repurchased €603 million in
shares (4,150,509 shares at an average price of €145.28).
For the remainder of this year, up to and including December 27,
2024, we have in place third-party mandates to execute
approximately €397 million in share buybacks on our behalf, within
the limits of relevant laws and regulations (in particular
Regulation (EU) 596/2014) and the company’s Articles of
Association. The maximum number of shares which may be repurchased
will not exceed the authorization granted by the Annual General
Meeting of Shareholders.
Assuming global economic conditions do not deteriorate
substantially, we believe this level of share buybacks leaves us
with ample headroom to support our dividend plans, to sustain
organic investment, and to make selective acquisitions. The share
repurchase program may be suspended, discontinued, or modified at
any time.
Share cancellation 2024
At the 2024 Annual General Meeting on May 8, 2024, shareholders
approved a resolution to cancel for capital reduction purposes any
or all ordinary shares held in treasury or to be acquired by the
company, up to a maximum of 10% of issued share capital. As of July
30, 2024, Wolters Kluwer held 11.6 million shares in treasury
(equivalent to approximately 4.7% of issued share capital). As
authorized by shareholders, the Executive Board has determined the
number of ordinary shares to be cancelled this year is 10.0
million. Wolters Kluwer intends to cancel these shares in the
second half of 2024. The remaining treasury shares will be retained
to meet future obligations under share-based incentive plans.
Net debt, leverage, credit facility, and liquidity
position
Net debt on June 30, 2024, was €2,932 million, up from €2,612
million on December 31, 2023, mainly due to dividends paid and the
share buyback. The net-debt-to-EBITDA ratio increased to 1.6x at
the end of June 2024 (YE 2023: 1.5x). Gross debt includes the new
€600 million Eurobond (5-year term; 3.250% annual coupon)
issued on March 18, 2024.
As of June 30, 2024, our €600 million multi-currency revolving
credit facility remained fully undrawn. In July 2024, we signed a
new €600 million 5-year multi-currency revolving credit facility,
replacing the existing facility which was due to expire in July
2025. The new facility matures in 2029 and includes two one-year
extension options.
As of June 30, 2024, net cash available was €808
million6.
Half-Year 2024 Results
Benchmark figures
Group revenues were €2,891 million, up 6% overall and up 6% in
constant currencies. The effect of currency and the net effect of
divestments and acquisitions were minimal in the first half of 2024
such that organic revenue growth was also 6% (HY 2023: 6%).
Revenues from North America accounted for 65% of total group
revenues and grew 6% organically (HY 2023: 5%). Revenues
from Europe, 27% of total revenues, also grew 6% organically (HY
2023: 7%). Revenues from Asia Pacific and Rest of World, 8% of
total revenues, grew 10% organically (HY 2023: 6%).
Adjusted operating profit was €765 million (HY 2023: €711
million), up 8% in constant currencies. The adjusted operating
profit margin increased by 40 basis points to 26.5% (HY 2023:
26.1%). Restructuring expenses, which are included in adjusted
operating profit, were €3 million
(HY 2023: €2 million). Product development spending
(including capitalized spend) increased 5% in constant currencies,
remaining at 11% of revenues in the first half (HY 2023: 11%).
Adjusted net financing costs increased to €25 million (HY 2023:
€10 million), reflecting higher debt and a higher average effective
cost of debt. Included in adjusted net financing costs was a €6
million net foreign exchange loss (HY 2023: €5 million net
foreign exchange gain) mainly due to the translation of
intercompany balances.
Adjusted profit before tax was €741 million (HY 2023: €701
million), up 6% overall and up 7% in constant currencies. The
benchmark effective tax rate on adjusted profit before tax
increased to 23.6% (HY 2023: 23.3%), due to increased limitations
on deduction of finance cost in the Netherlands and the application
of the Global Minimum Tax (Pillar Two) regulation.
Adjusted net profit was €566 million (HY 2023: €537 million), an
increase of 7% in constant currencies.
Diluted adjusted EPS was €2.36 (HY 2023: €2.17), up 11% in
constant currencies, reflecting the increase in adjusted net profit
and a 3% reduction in the diluted weighted average number of shares
outstanding to 240.1 million (HY 2023: 248.0 million).
IFRS reported figures
Reported operating profit increased 9% to €690 million (HY 2023:
€632 million), reflecting the increase in adjusted operating profit
combined with lower amortization and impairments of acquired
intangible assets and other non-benchmark costs.
Reported financing results amounted to a net cost of €26 million
(HY 2023: €11 million cost) reflecting higher debt and a higher
average effective cost of debt. The reported effective tax rate
increased to 23.4% (HY 2023: 22.8%) due to increased limitations on
deduction of finance cost in the Netherlands and the application of
the Global Minimum Tax (Pillar Two) tax regulation.
As a result, net profit for the period increased 6% to €509
million (HY 2023: €479 million). Diluted EPS increased
10% to €2.12 (HY 2023: €1.93), benefitting from the reduction in
weighted average number of shares outstanding.
Cash flow
Adjusted operating cash flow was €624 million (HY 2023: €673
million), down 7% overall and down 7% in constant currencies,
broadly as expected and partly reflecting the timing of large
vendor payments. The cash conversion ratio declined to 82% (HY
2023: 95%) due to working capital outflows of €117 million compared
to a small inflow in the comparable period (HY 2023:
€11 million inflow). Capital expenditures declined 6% to €147
million (5.1% of revenues) mainly due to the phasing of development
projects. Cash payments related to leases, including lease interest
paid, reduced to €35 million (HY 2023: €38 million).
Depreciation of physical assets, amortization and impairment of
internally developed software, and depreciation of right-of-use
assets totaled €158 million (HY 2023: €146 million).
Net interest paid, excluding lease interest paid, increased to
€23 million (HY 2023: €18 million), reflecting the higher
coupon on the Eurobond issued in April 2023. Income tax paid
decreased to €171 million (HY 2023: €176 million), reflecting
timing of refunds and prepayments. The net cash outflow related to
restructuring was €2 million (HY 2023: net outflow of €3 million).
As a result, adjusted free cash flow was €445 million (HY 2023:
€495 million), down 10% in constant currencies.
Total acquisition spending, net of cash acquired and including
transaction costs, was €2 million
(HY 2023: €56 million) relating to deferred payments
on acquisitions made in prior years. Dividends paid amounted to
€276 million (HY 2023: €247 million). Cash deployed towards share
repurchases in the first six months amounted to €516 million (HY
2023: €426 million).
Sustainability and ESG developments
With regard to our own workforce, our primary focus in the first
half of 2024 was to continue attracting and retaining top talent in
what remain competitive markets, especially for technology skills.
Our human resources programs currently emphasize career development
and manager enablement as well as fostering a supportive and
engaging work environment. In the first half, our workforce
turnover rate was stable at 10% (HY 2023: 10%; FY 2023: 10%) with
voluntary turnover at 7%.
We remain focused on delivering on our SBTi-validated
emissions-reduction targets, which commit us 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. Business travel activity increased in the first half, in part
due to a year-on-year increase in FTEs. However, we made progress
on reducing our real estate footprint (and related scope 1 and 2
emissions) achieving a 4% underlying reduction in office space
(m2) compared to year-end 2023.
Our sustainability efforts were recognized with a further
improvement in our ESG risk rating from Morningstar Sustainalytics
to 13.2 (from 14.4) bolstering our position in the top 5% of
companies in the Software & Services sector globally.
We continued work to align our sustainability reporting with the
standards set by the EU Corporate Sustainability Reporting
Directive (CSRD).
The full results are available in PDF format
below
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 2023 annual revenues of €5.6 billion.
The group serves customers in over 180 countries, maintains
operations in over 40 countries, and employs approximately 21,400
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, Euro Stoxx 50, 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
LinkedIn, Facebook, YouTube and Instagram
Financial Calendar |
|
August 27, 2024 |
Ex-dividend date:
2024 interim dividend |
August 28, 2024 |
Record date: 2024
interim dividend |
September 19, 2024 |
Payment date:
2024 interim dividend |
September 26, 2024 |
Payment date:
2024 interim dividend ADRs |
October 30, 2024 |
Nine-Month 2024
Trading Update |
February 26, 2025 |
Full-Year 2024
Results |
March 12, 2025 |
Publication of
2024 Annual Report |
Media |
Investors/Analysts |
Dave Guarino |
Meg Geldens |
Communications |
Investor
Relations |
t + 1-646 954 8215 |
t + 31
(0)172-641-407 |
press@wolterskluwer.com |
ir@wolterskluwer.com |
Forward-looking Statements and Other Important Legal
Information
This 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.
3 NCLEX = National Council Licensure Examination for the
licensing of nurses in the United States, Canada, and
Australia.
4 BOI = Beneficial Ownership Information required to be
reported under the U.S. Corporate Transparency Act.
5 Dividend payout ratio: dividend per share divided by
adjusted earnings per share.
6 Total cash and cash equivalents of €845 million less
overdrafts used for cash management purposes of €37 million.
- 2024.07.31 Wolters Kluwer 2024 Half-Year Results
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