London Stock Exchange: Buybacks to sweeten shareholders despite profit fall
The London Stock Exchange Group expects to hand out as much as £750m to shareholders in buybacks by next April, as it seeks to appease investors after a sharp drop in profits this year.
Challenging economic conditions and a higher effective tax rate have seen earnings slide over the first six months of trading in 2023, leaving the group eager to placate shareholders.
Profits over the first six months of trading this year have tumbled to £729m, a 18.4 per cent year-on-year decline, even as the financial hub hikes dividends from 31.7p per share to 35.7p per share – with £400m given away already in the first half of this year.
While its income levels have grown 11.4 per cent from £3.57bn to £3.99bn, it has suffered a fall in profit margins from 50.4 per cent to 49.6 per cent.
LSEG also has revealed it is making “good progress” on its product developments with new partner Microsoft – including a new design programme.
It further highlighted growth areas including data and analytics (7.6 per cent), capital markets (1.5 per cent) and post trade (19.2 per cent), while a rise in subscription revenue (6.9 per cent) consolidated significant improvements made over the last two years
The group is on course for to deliver £107m in synergies, and that Tradeweb solution for emerging market debt is now live.
It has also further snapped up post-trade specialist Acadia and is expected to launch a new foreign exchange matching platform later this year.
Artificial intelligence has also been embedded in many products including its advanced dealing solutions for foreign exchange markets, partnering with customers as they deploy AI technologies
David Schwimmer, chief executive, said: “Through our multi-year investment programme we are delivering better solutions and higher customer satisfaction, and building a faster-growing, more scalable business. We are progressing well with the implementation phase of our transformational strategic partnership with Microsoft, with customers beginning to see the benefits from next year.”
The FTSE 100 company is trading at 8,286p per share on the London Stock Exchange ahead of markets opening this morning.