Financial Forecast Disappoints Investors
Wolters Kluwer, a Dutch information services company, experienced a decline in its shares following the announcement of anticipated challenges impacting its adjusted earnings per share for the year. The company revealed that higher financing costs and taxes are expected to hinder the growth in earnings per share, causing a negative reaction from investors.
Share Performance
At 0837 GMT, shares of Wolters Kluwer were down EUR0.60, representing a 0.5% decrease and trading at EUR146.50. The share price had dropped to a low of EUR140.20 earlier in the trading session. Despite this setback, shares have seen a positive trend over the past 12 months, with a notable 39% increase in value.
Financial Projections
Wolters Kluwer disclosed that it foresees adjusted net financing costs in constant currencies to reach 60 million euros ($64.9 million) for the year, a substantial rise from EUR27 million in the previous year. Additionally, the company expects the tax rate to fall between 23.0% and 24.0%, slightly higher than the previous rate of 22.9%.
Impact on Earnings
As a result of these financial factors, Wolters Kluwer anticipates mid-to-high single-digit percentage growth in diluted adjusted earnings per share for 2024, compared to a significant increase of 12% in the previous year. The diluted adjusted earnings per share for 2023 stood at 4.55 European cents.
Restructuring Costs
In addition to the financial challenges, Wolters Kluwer plans to incur between EUR10 million and EUR15 million in restructuring charges for the current year, compared to EUR15 million in the previous period.
Financial Performance
The company reported a net profit of EUR1.01 billion for the year ended Dec. 31, down from EUR1.03 billion in the previous year but surpassing consensus estimates of EUR975.2 million based on forecasts from 10 analysts using FactSet data. Adjusted Operating Profit and Revenue Growth
Adjusted Operating Profit
Adjusted operating profit– a company-preferred metric that strips out exceptional and other one-off items- was EUR1.48 billion compared with EUR1.42 billion. The adjusted operating profit margin rose to 26.4% from 26.1%, within company guidance of 26.1% to 26.5%.
For 2024, adjusted operating profit margin is expected to be in the range of 26.4%-26.8%, as per the company’s announcement.
Revenue Increase
Revenue rose to EUR5.58 billion from EUR5.45 billion, driven by strong momentum in recurring revenues. Consensus from FactSet, based on the estimates of 11 analysts, expected EUR5.58 billion.
North America: Revenue from North America, representing 64% of total group revenues, grew 5% organically.
Europe: Revenue from Europe grew 7% organically.
Asia Pacific and Other Segments: Revenue from Asia Pacific and other segments grew 9% organically.
Dividend and Share Buyback Program
The board declared a final dividend of EUR2.08 a share, marking an increase of 15%. Additionally, they announced plans to launch a share buyback program of up to EUR1.0 billion this year.
Chief Executive Nancy McKinstry emphasized, “We met our financial and sustainability goals, while increasing investment in product innovation, including in generative AI, to support future growth. We look forward to delivering another year of good organic growth and margin improvement in 2024.”
