Relx still strong and steady

Relx (REL) is one of the FTSE 100’s biggest and hardiest constituents. Demand for its data products has stayed high through lockdowns and slowdowns, and its analytics and decision tools have generated steady revenue and profit growth. The pandemic proved troublesome for its events division, but now even that is heading in the right direction. 

Underlying revenue growth reached 8 per cent in the first half of 2023, while adjusted operating profit rose by 20 per cent to £1.49bn. All divisions put in a strong performance. Risk, Legal, and Scientific, Technical & Medical delivered underlying sales growth of 8 per cent, 6 per cent and 4 per cent, respectively, and two of the three nudged up their operating margins. 

Exhibitions was the stand-out performer, however. After years of disrupted conferences and travel restrictions, Relx benefited from a “significant increase in face-to-face activity with exhibition venues now reopened across all geographies”. Revenue rose by 38 per cent to £545mn, while adjusted operating profit almost trebled to £173mn. 

These results are still lower than 2019 levels, but the events arm is certainly heading in the right direction and management expects its full-year adjusted operating margin to be above pre-pandemic levels.

Relx is more expensive than it has been in the past. It is trading on a forward price to earnings ratio of 22, compared with a five-year average of 20.4. However, its growth has been extremely consistent and the outlook is encouraging. Management noted an “ongoing shift in business mix towards higher growth analytics and decision tools”, and plans to leverage artificial intelligence to drive the business forward. Buy.

Last IC View: Buy, 2,513p, 16 Feb 2023

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