Informa hikes dividend and announces buyback

Informa (INF) shareholders are still receiving an abundance of cash following the sale of the group’s intelligence arm in 2022 and a bounce-back in corporate events. The FTSE 100 company has increased its full-year dividend by 84 per cent year on year to 18p a share and has pledged to buy back at least £340mn of shares in 2024. £700mn was returned to shareholders via dividends and buybacks last year. 

Underlying revenue jumped by 30.4 per cent in 2023 and underlying operating profit by 59 per cent to £854mn. Informa is still bouncing back from the pandemic, and growth is expected to moderate this year. However, management has upgraded its guidance and is targeting high-single-digit revenue growth, double-digit growth in adjusted operating profit, and a further increase in operating margin.

These targets are rooted in reality: £500mn of revenues has already been delivered and a further £1bn has been booked, committed or is ‘visible’, according to management. India, the Middle East and Africa have been identified as particularly strong sources of growth.

Informa is now mainly an events company, with an academic publishing arm attached. Coming out of Covid, there is a lot to like about this business model and the sale of the intelligence arm provided lots of financial firepower to expand in the events market. Long term, however, we worry that Informa will be more exposed to macroeconomic conditions and earnings visibility will be limited. We would like more evidence of how Informa will fare in a post-Covid world before we commit. Hold.

Last IC View: Hold, 780p, 27 Jul 2023