May 11, 2016 - Wolters Kluwer, a
global leader in professional information services, today released
its scheduled 2016 first-quarter trading update.
Highlights
-
Full-year 2016 guidance
reiterated.
-
First-quarter revenues up 2% in
constant currencies and up 3% organically.
-
Digital & services revenues continue to drive the group's
organic growth.
-
First-quarter adjusted
operating profit margin increased.
-
First-quarter adjusted free
cash flow increased in constant currencies.
-
Net-debt-to EBITDA ratio 1.5x
as of 31 March, 2016.
Nancy McKinstry, CEO and Chairman
of the Executive Board, commented:
"Our overall performance in the first quarter was
in line with our expectations and we are on track to achieve our
outlook for 2016. We continue to allocate capital towards our
leading growth units and digital products, with increasing focus on
expert solutions that help our professional customers be more
effective and productive in their daily workflow. We also remain
focused on driving efficiencies across the board to help fund our
ongoing program of product innovation."
First Quarter
Developments
In the first quarter, revenues increased 2% at constant currencies
and 3% on an organic basis. The effect of divestitures on revenues
exceeded the effect of acquisitions in the first quarter. In
reporting currency, revenues rose 3%, reflecting a 1% positive
impact on revenues from currency, as the stronger U.S. Dollar
(average EUR/USD 1.10 in the quarter) outweighed weakness in other
currencies. Organic growth was supported by solid momentum in
recurring revenues. Non-recurring revenues, in aggregate, advanced
at a more moderate pace in the first quarter, largely as
expected.The quarter saw deceleration in North America and Asia
Pacific & ROW offset by improvement in Europe. The
first-quarter adjusted operating profit margin increased compared
to a year ago, supported by the ongoing shift in business mix,
lower restructuring charges, the results of efficiency programs,
and disposals of certain loss-making units.
Health achieved good organic growth and increased
its adjusted operating profit margin in the first quarter. Organic
growth benefitted from phasing which will reverse in the second
quarter. Clinical Solutions delivered strong organic growth, led by
UpToDate. Health Learning, Research &
Practice performed well on an organic basis, supported by growth in
digital subscription revenues. For the full year, we continue to
anticipate another year of good organic revenue growth for the
division, supported by robust organic growth in Clinical Solutions
and a gradually improving trend in Health Learning, Research &
Practice. Margins are expected to improve slightly even as we
continue to invest to drive organic growth.
Tax & Accounting delivered modest organic
growth, in line with our expectations, largely reflecting seasonal
patterns and timing. Adjusted operating profit margins declined, in
line with our guidance, due to increased product investment. Growth
in software solutions continued to be partly offset by weakness in
print formats, bank products and training, as anticipated. For the
full year, we expect underlying revenue growth to slightly improve
from 2015 levels, driven by continued mix shift towards software
solutions. The first half is, however, expected to see slower
growth due to seasonal sales patterns and timing effects. Margins
are expected to ease in the first half, but to be maintained for
the full year.
Governance, Risk & Compliance delivered good
organic growth, albeit slower than in the comparable quarter of
2015. Legal Services (the former Corporate Legal Services unit
excluding CT Lien Solutions) saw recurring subscription revenues
and transaction fees grow at a more moderate pace. Financial
Services (which comprises all units serving financial services
customers, including CT Lien Solutions) also experienced more
temperate growth as it faced challenging comparables related to
last year's strong growth in software implementations and the
enactment of the TILA RESPA regulation. Transport Services saw
revenue decline as expected. For the full year, we continue to
expect the division to deliver positive but slower organic growth,
given demanding comparables for transactional and non-recurring
license and implementation fees. The latter effect is expected to
be more pronounced in the second quarter. Full-year margins are
expected to improve slightly.
Legal & Regulatory saw its rate of organic
revenue decline improve compared to the comparable quarter. Digital
solutions grew well, but this performance was, as expected, more
than offset by lower revenues from print formats. Overall
divisional revenues also reflect a number of divestitures completed
in 2015. The divisional adjusted operating profit margin improved
due to lower restructuring costs, operating efficiencies, and
certain divestitures. For the full-year, we continue to expect the
division's organic revenue decline to be similar to 2015, with
print trends continuing to outweigh growth in digital. Organic
growth in the first half is expected to benefit from timing and
one-off factors. Full-year margins are expected to improve due
mainly to lower restructuring costs; savings are expected to be
reinvested in wage inflation and increased product investment.
Cash Flow and Net Debt
Cash conversion was broadly stable in the first
quarter compared to a year ago. Adjusted free cash flow increased
in constant currencies, mainly as a result of higher adjusted
operating profit. First quarter net acquisition spending, net of
cash acquired, was €8 million. Twelve-months-rolling
net-debt-to-EBITDA was 1.5x at the end of March and remains
favorable to target (2.5x).
In February 2016, we announced a share buyback
program for up to €600 million over three years (2016-2018). As of
May 10, a total of 0.3 million ordinary shares have been
repurchased for a total consideration of approximately €10
million.
A final dividend of €0.57 per share was approved
at the Annual General Meeting of Shareholders in April and will be
paid in the second quarter. The final dividend brings the total
dividend over the 2015 financial year to €0.75 per share, an
increase of 6% compared to the 2014 dividend. For 2016, the interim
dividend will again be set at 25% of the prior year's total
dividend.
Full-Year 2016 Outlook
We reaffirm our full-year 2016 guidance. The table
below provides our guidance for the full-year.
2016 Outlook |
Performance indicators |
2016 guidance |
Adjusted operating profit margin |
21.5%-22.0% |
Adjusted free cash flow |
€600-€625 million |
Return on invested capital |
>
9% |
Diluted adjusted EPS |
Mid-single-digit growth |
Guidance
for adjusted free cash flow and diluted adjusted EPS is in constant
currencies (EUR/USD 1.11). Guidance for EPS growth assumes the
announced share repurchases are equally spread over 2016-2018.
Adjusted operating profit margin and ROIC are in reported
currency. |
Our guidance is based on constant exchange rates.
In 2015, Wolters Kluwer generated more than half of its revenues
and adjusted operating profit in North America. As a rule of thumb,
based on our 2015 currency profile, a 1 U.S. cent move in the
average EUR/USD exchange rate for the year causes an opposite
change of approximately one and a half euro-cents in diluted
adjusted EPS.
Restructuring costs, which are included in
adjusted operating profit, are expected to start returning to
normal levels in 2016: we expect these costs to be around €15-€25
million in 2016 (2015: €46 million). We expect adjusted net
financing costs of approximately €105 million, excluding the impact
of exchange rate movements on currency hedging and intercompany
balances. We expect the benchmark effective tax rate to return to
the range of 27%-28% in 2016. We expect a cash conversion ratio of
approximately 95%, with capital expenditure rising to around 5% of
total revenue.
Our guidance assumes no significant change in the
scope of operations. We may make further disposals which could be
dilutive to margins and earnings in the near term.
About Wolters Kluwer
Wolters Kluwer is a global leader in information
services and solutions for professionals in the areas of health,
tax and accounting, finance, risk and compliance, and legal. We
help our customers make critical decisions every day by providing
expert solutions that combine deep domain knowledge with
specialized technology and services.
Wolters Kluwer reported 2015 annual revenues of
€4.2 billion. The group, headquartered in Alphen aan den Rijn, the
Netherlands, serves customers in over 180 countries, maintains
operations in over 40 countries, and employs approximately 19,000
people worldwide.
Wolters Kluwer shares are listed on Euronext
Amsterdam (WKL) and are included in the AEX and Euronext 100
indices. Wolters Kluwer has a sponsored Level 1 American Depositary
Receipt program. The ADRs are traded on the over-the-counter market
in the U.S. (WTKWY).
For more information about our products and
organization, visit www.wolterskluwer.com and follow us on
Twitter, Facebook, LinkedIn, and YouTube.
Financial
Calendar
May 12,
2016 |
Payment
date: 2015 final dividend ordinary shares |
May 19,
2016 |
Payment
date: 2015 final dividend ADRs |
July 29,
2016 |
Half-Year
2016 Results |
August
29, 2016 |
Ex-dividend date: 2016 interim dividend |
August
30, 2016 |
Record
date: 2016 interim dividend |
September
14, 2016 |
Payment
date: 2016 interim dividend ordinary shares |
September 21, 2016 |
Payment
date: 2016 interim dividend ADRs |
November
2, 2016 |
Nine-Month 2016 Trading Update |
February
22, 2017 |
Full-Year
2016 Results |
Media |
Investors/Analysts |
Annemarije Pikaar |
Meg
Geldens |
Corporate
Communications |
Investor
Relations |
t + 31
(0)172 641 470 |
t + 31
(0)172 641 407 |
press@wolterskluwer.com |
ir@wolterskluwer.com |
Forward-looking
Statements
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;
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.
PDF version of Press
Release
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Wolters Kluwer NV via Globenewswire
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