RELX Skips Buybacks, Focuses on Recovery From Pandemic Hit -- Update
--RELX expects largest segments to return to pre-pandemic growth
--Events disruption hurt group's 2020 profit and increased
--CFO Nick Luff said dividend increase signals confidence in
By Adria Calatayud
RELX PLC doesn't plan to buy back shares this year, as it
focuses on bringing its underlying revenue growth and its
debt-to-earnings ratio back to pre-coronavirus levels, Chief
Financial Officer Nick Luff said Thursday.
Buybacks had been a feature at the LexisNexis owner since 2012,
but the company suspended its latest share-repurchase program of
400 million pounds ($553.4 million) in April due to the coronavirus
pandemic and doesn't plan to resume it for now.
"We have ruled out buybacks for this year. We will have to make
a judgment a year from now," Mr. Luff told The Wall Street Journal.
A resumption of buybacks will depend on the degree to which
exhibitions activity picks up, the performance of the company's
three largest segments and its expenditure on acquisition, Mr. Luff
With venue closures hurting the company's events segment, the
FTSE 100 information-and-analytics group reported lower net profit
and revenue for 2020, although its performance was broadly in line
with analysts' expectations.
The pandemic dragged down RELX's earnings and pushed up its
ratio of net debt to adjusted earnings before interest, taxes,
depreciation and amortization to 3.3 times last year, calculated in
U.S. dollars. This compares with 2.5 times in 2019.
Mr. Luff said the company wants to bring its leverage ratio back
down this year, and that the lack of buybacks will help it in that
effort. To compensate for the absence of buybacks, RELX's board
raised its full-year dividend to 47 pence a share from 45.7 pence
The increased dividend should be seen as a sign of confidence in
the business, Mr. Luff said.
RELX said it made a net profit for last year of GBP1.22 billion
compared with GBP1.51 billion for 2019.
The company said adjusted operating profit--one of its preferred
earnings metrics, which strips out exceptional and other one-off
items--fell 17% to GBP2.08 billion, but was slightly ahead of
analysts' expectations of GBP2.03 billion.
RELX, which also owns medical journal The Lancet and the London
Book Fair, generated revenue of GBP7.11 billion, down 10% on year.
Analysts had expected revenue of GBP7.19 billion, according to a
consensus based on estimates by 16 analysts polled by FactSet.
On an underlying basis, revenue was down 9%.
RELX said it expects that each of its three largest
segments--scientific, technical and medical, risk-and-business
analytics, and legal--will deliver underlying revenue and adjusted
operating profit growth in 2021 similar to pre-pandemic trends.
Some universities face budgetary pressures which could weigh on
subscription revenue in RELX's scientific, technical and medical
segment, the group's largest, but Mr. Luff said the company is
giving them choices and that these constraints are factored into
guidance of modest underlying revenue growth this year for the
However, the company warned that the timing and pace of recovery
in its exhibitions segment remains uncertain.
Mr. Luff said the company is running events in Japan and other
Asian countries as well as in online formats, although it is
unclear when it will be able to host exhibitions again in Europe
and North America. Nothing major is planned in Europe and North
America until the end of the third quarter, and that will depend on
restrictions being lifted, he said.
Write to Adria Calatayud at firstname.lastname@example.org
(END) Dow Jones Newswires
February 11, 2021 08:13 ET (13:13 GMT)
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