ii view: RELX chairman retires but City likes the numbers

Despite rising profit and eight consecutive years of dividend growth, this media giant is often overlooked. 

Full-year results to 31 December 2019

• Revenue up 5% to £7.87 billion
• Adjusted operating profit up 6% to £2.49 billion
• Full-year dividend up 9% to 45.7p per share

Guidance:

• Expects 2020 to generate underlying growth in revenue and adjusted operating profit
• To execute a £400 million 2020 share buyback programme

Chief executive Erik Engstrom said:

"RELX continued to make good progress in 2019. Our number one strategic priority is unchanged: the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers, supplemented by selective acquisitions of targeted data, analytics and exhibition assets that support our organic growth strategies."

ii round-up:

A current favoured company of highly-regarded fund management group Lindsell Train, media company RELX (LSE:REL) reported full-year results broadly in line with City forecasts.

An ongoing push towards online provision of information-based analytics and decision tools and away from print provision helped overall group sales or revenue rise by 5% to nearly £8 billion. 

RELX, whose services also include events and exhibitions provision, made 14 acquisitions over the year for a total of £416 million. Adjusted operating profit rose by 6% to £2.49 billion, aided by sales growth, with £600 million in share buybacks being executed. 

The publisher serves customers in more than 180 countries and has offices in about 40 countries. It employs over 30,000 people of whom almost half are in North America. 

It operates across the four divisions of Scientific, Technical & Medical (STM), its largest by sales, Risk & Business Analytics, Legal and Exhibitions. 

Group Chairman Sir Anthony Habgood is now to retire after more than 10 years of service, during which time the share price has gained by over 300% compared to a 30%-plus loss for rival Pearson (LSE:PSON). 

As for the coronavirus, and despite rescheduling around nine exhibitions in China, management did not yet feel able to make a judgement on its possible impact. Exhibitions is its smallest division, generating around 16% of sales.  

The share price rose by just over 1% in late-morning UK trade. 

ii view:

RELX’s diversity of business and global customer base are core strengths, again showcased by these latest results. Now customary low key but reassuring outlook comments point to 2020 being another year of growth in key financial metrics. 

For investors, a progressive dividend policy and eight consecutive years of growth is not to be overlooked. However, a historic dividend yield of just over 2% is below the 4.35% average for the FTSE 100 index, while a forward price/earnings ratio (PE) broadly in line with the three-year average offers little direction. 

Positives: 

• Diversity in both business type and geographical region
• Progressive dividend policy

Negatives:

• The coronavirus could hit its exhibitions business 
• Group net debt stands at £6.2 billion as of 31 December 2019

The average rating of stock market analysts:

Buy