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Wolters Kluwer 2010 Half-Year Results

Guidance reiterated – confirms successful strategy

​Wolters Kluwer, a market-leading global information services company focused on professionals, today released its 2010 half-year results. Highlights include strong growth in electronic products, improved ordinary EBITA margin and solid free cash flow. The resiliency of Wolters Kluwer’s portfolio and strong market position support global expansion.

Financial Highlights

  • Overall revenue of €1,728 million in line with prior half year; underlying revenue growth improved
  • Electronic revenue grew 4%, now representing 55% of total revenues, up from 52% in 2009
  • Ordinary EBITA margin of 19% represents 40 basis point improvement over 2009 first half
  • Free cash flow increased 13% to €165 million, with strong cash conversion of 95%
  • Additional financing activity extends debt maturity profile at attractive market rates
  • Springboard savings €67 million; on track to deliver expected savings of €125 million in 2010
  • 2010 Full-year and medium-term guidance reiterated

Key Figures 2010 Half-Year

Six months ended June 30

2010

2009

∆ CC

∆OG

Revenue (€ millions)

1,728

1,720

0%

(1%)

0%

Electronic revenue % of total

55%

52%

 

 

 

Ordinary EBITA (€ millions)

328

320

2%

2%

2%

Ordinary EBITA margin (%)

19.0%

18.6%

 

 

 

Ordinary net income (€ millions)

193

203

(5%)

0%

 

Diluted EPS (€)

0.42

0.45

(6%)

1%

 

Diluted ordinary EPS (€)

0.65

0.70

(7%)

(2%)

 

Free cash flow (€ millions)

165

146

13%

19%

 

 

∆ - % Change; ∆ CC - % Change constant currencies (EUR/USD 1.39); ∆ OG – % Organic growth

Nancy McKinstry, CEO and Chairman of the Executive Board, commented on the performance:
“We are encouraged by our performance in the first half of 2010. Wolters Kluwer delivered revenue that was in line with 2009, while at the same time, improving operating margins and cash flow. These results demonstrate the resiliency of our portfolio and the benefits from continuous investments in the business. 


The first half year showed a significant improvement in our global Health & Pharma Solutions division which posted 3% underlying revenue growth and improved profitability. Tax & Accounting and Financial & Compliance Services also posted positive underlying growth.

Our strategy drives our portfolio towards higher-value online and software solutions that help our customers generate effective results. Our half-year results highlight an increase in electronic revenues to 55% of total revenues, and are underpinned by stable retention rates and good growth in electronic subscriptions. In addition, strong growth in cash flow and improving operating margins support our commitment to invest 8-10% of our revenues in new and enhanced products that will drive future growth. The good start to the year provides confidence we will achieve 2010 full-year guidance.”

Overview
Wolters Kluwer reported solid results for the first half year of 2010. Despite continued global economic pressures, the company posted good growth in electronic revenue (+4%) and operating margin (ordinary EBITA +2%). Ordinary EBITA margin improved 40 basis points from 18.6% to 19.0% supported by a resilient subscription portfolio, the continued migration of revenue towards higher margin online and software products, and operational excellence programs including Springboard. Diluted ordinary EPS in constant currencies was down 2% due to a higher number of shares (stock dividend) and timing on taxes.

The company’s leading brands, resilient portfolio, and strong cash generation continue to support a solid financial position. In the six months ended June 30, 2010, free cash flow increased 13% to €165 million. Net debt was €2,100 million with a net-debt-to-EBITDA ratio improving to 2.9 from 3.1 (at the first half year 2009). In July, the company signed a €600 million multi-currency credit facility and a €250 million private placement. These new debt instruments refinance the existing credit facility of €928 million, increasing the company’s liquidity and headroom, and further extending Wolters Kluwer’s maturity profile at attractive market rates with an annual coupon of 4.20% for the private placement.

Download the full report, including the divisional overview.

Forward-looking Statements
This press release contains forward-looking statements. These statements may be identified by words such as “expect”, “should”, “could”, “shall”, and similar expressions. Wolters Kluwer cautions that such forward-looking statements are qualified by certain risks and uncertainties that could cause actual results and events to differ materially from what is contemplated by the forward-looking statements. Factors which could cause actual results to differ from these forward-looking statements may include, without limitation, general economic conditions; conditions in the markets in which Wolters Kluwer is engaged; behavior of customers, suppliers, and competitors; technological developments; the implementation and execution of new ICT systems or outsourcing; and legal, tax, and regulatory rules affecting Wolters Kluwer’s businesses, as well as risks related to mergers, acquisitions, and divestments. In addition, financial risks such as currency movements, interest rate fluctuations, liquidity, and credit risks could influence future results. The foregoing list of factors should not be construed as exhaustive. Wolters Kluwer disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.