ii view: India and Africa aid growth and shareholder returns at Informa
Aiding sectors such as life sciences and technology and increasing shareholder returns. We assess prospects for this FTSE 100 events company.
8th March 2024 12:14
by Keith Bowman from interactive investor
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Full-year results to 31 December
- Revenue up 41% to £3.2 billion
- Adjusted operating profit up 72% to £853 million
- Final dividend of 12.2p per share
- Total 2023 dividend up 84% to 18p per share
- Net debt of £1.45 billion, up from £245 million
Guidance:
- Now expects 2024 revenues of between £3.45 billion and £3.5 billion, up from £3.42-£3.47 billion
- Now expects 2024 adjusted profit of £950-£970 million, up from £945-£965 million
Chief executive Stephen Carter said:
"Informa's final results confirm further outperformance in 2023 and continuing momentum and growth in 2024."
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ii round-up:
Growth in India, Africa and the Middle East helped exhibitions organiser and academic and business research publisher Informa (LSE:INF) today raise its 2024 sales and profit estimates.
More than £500 million of sales and over £1 billion of forward booked events and subscriptions so far in 2024 underpinned a 1% increase in forecast sales and profits for the year ahead. Sales of up to £3.5 billion are now expected to drive 2024 adjusted profit up to £970 million, allowing an additional £250 million of potential share buybacks on top of the £90 million already executed so far this year.
Shares in the FTSE 100 company rose 2% in UK trading having come into these results up by close to a fifth over the last year. That’s similar to education materials provider Pearson (LSE:PSON) and comfortably ahead of a near one-third fall for ad company WPP (LSE:WPP). The FTSE 100 index itself has fallen 3% over the last year.
Informa’s 2023 sales climbed 41% to £3.2 billion, taking adjusted operating profit up to £854 million from £496 million in 2022.
Revenues at its previously pandemic hindered exhibitions, or markets division climbed 65% year-over-year to £1.6 billion. Strong demand for specialist knowledge and growth in higher education globally boosted sales at its research publishing division Taylor & Francis.
Growing demand for business conferences, live experiences and specialist knowledge combined to increase sales across India, Egypt, Turkey, and Saudi Arabia during the year.
Share buybacks of £550 million in 2023 added to a near doubling in the total dividend to 18p from 2022’s 9.8p per share.
Broker UBS reiterated its ‘buy’ stance on the shares post the results. A trading update is likely to accompany its AGM, expected in mid-June.
ii view
Founded in 1998, Informa’s services today help businesses connect and make better informed decisions. It operates across the four divisions of Markets (exhibitions), Connect which organises on-demand experiences and seminars, Tech specialising in technology company clients, and specialist knowledge research publisher Taylor & Francis. Prior to the pandemic in 2020, Informa boasted a record of six consecutive years of growth in underlying revenue, profit, adjusted earnings and cashflow.
For investors, heightened geopolitical tensions and closer ties between Russia and China and other emerging market nations should not be ignored. Group net debt has risen, costs for businesses generally remain elevated, while the forecast dividend yield of around 2.5% is below the 5%-plus estimates at rival media sector rivals ITV (LSE:ITV) and WPP.
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On the upside, exposure to markets such as India, Indonesia and China are assisting growth. Diversity of both business type and geographical region exist, a net debt-to-adjusted profit ratio of 1.4 times remains within management’s comfortable levels, while increasing profits and cashflows are aiding shareholder returns and a modest dividend yield.
In all, and while Informa’s recovery from the pandemic is now likely to be largely complete, exposure to emerging market growth, plus a consensus analyst fair value estimate of more than 920p per share, look to offer grounds for continued optimism.
Positives:
- Diversity of businesses
- Ongoing share buybacks
Negatives:
- Uncertain geopolitical global backdrop
- Possible ethical concerns given exposure to Saudi Arabia
The average rating of stock market analysts:
Buy
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