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Relx marked down on disappointing sales

The group has spent £400m on buy-backs, with another £200m scheduled this year
July 25, 2019

Shares in Relx (REL) were marked down on release of its half-year results to June, as underlying revenue growth was weaker than the market had anticipated – coming in at 3 per cent, against analysts’ estimates of 4 per cent.

IC TIP: Hold at 1850p

Scientific, technical and medical (STM) – the group’s largest business – saw sales edge up by 4 per cent on a reported basis to £1.2bn, or 1 per cent underlying. Risk and business analytics (R&BA) grew by 7 per cent underlying. Yet Barclays reckons that the market had been expecting 2 per cent and 8 per cent, respectively.

Within STM, last year's strong book sales failed to repeat. However, the group said that the number of articles submitted and published in its subscription journals continued to grow well, as did those pertaining to its open-access publishing programme.  In insurance (which sits within R&BA), US market conditions were less positive year on year, although Relx said the “fundamental growth drivers of [RB&A] remain strong”.

Net debt climbed from £6.2bn to £6.6bn, equivalent to 2.6 times adjusted cash profits. More encouragingly, adjusted cash flow conversion sat at 94 per cent, up from 93 per cent.

Numis expects adjusted EPS of 91.5p for 2019, up from 84.1p in 2018.

RELX (REL)    
ORD PRICE:1,850pMARKET VALUE:£ 36.0bn
TOUCH:1,849-1,851p12-MONTH HIGH:1,984pLOW: 1,467p
DIVIDEND YIELD:2.3%PE RATIO:24
NET ASSET VALUE:115p*NET DEBT:£6.6bn
Half-year to 30 JunTurnover (£bn)Pre-tax profit (£bn)Earnings per share (p)Dividend per share (p)
20183.650.8734.112.4
20193.891.0039.913.6
% change+6+15+17+10
Ex-div:01 Aug   
Payment:02 Sep   
*Includes intangible assets of £10.6bn or 546p a share