--RELX expects largest segments to return to pre-pandemic growth this year

--Events disruption hurt group's 2020 profit and increased debt-to-earnings ratio

--CFO Nick Luff said dividend increase signals confidence in business

 

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 said.

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 in 2019.

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 segment.

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 adria.calatayud@dowjones.com

 

(END) Dow Jones Newswires

February 11, 2021 08:13 ET (13:13 GMT)

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