Shares in publisher Relx drop as growth falls short of expectations
Shares in academic analytics firm Relx dropped as much as five per cent in early trading after it missed expectations for half-year revenue growth.
Relx, which also runs exhibitions such as Comic Con, posted a three per cent rise in revenue to £3.9bn in the six months to the end of June, while profit before tax rose eight per cent to £1.1bn.
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But the figures fell short of analysts’ expectations, and shares dropped following the announcement.
Liberum analyst Harry Read said the share price drop appeared “harsh”, but said it was likely driven by the slowdown in underlying growth, with a particularly disappointing performance in its scientific division.
Relx, which has a market capitalisation of £38bn, has also been rocked by fears about the cancellation of university contracts after the University of California scrapped its $11m (£8.8m) deal with the firm’s publishing arm Elsevier earlier this year.
But Sarah Simon, senior analyst at Berenberg, argued the focus on the firm’s scientific, technical and medical services was not warranted.
“The real issue is that stocks like Relx, Informa and Wolters Kluwer have all performed really strongly in the year to date as the market focuses more and more on reliable growth names rather than cheap companies with structural issues,” she told City PM.
“So with valuation multiples up at these levels, any wobble, even if its only about timing, is getting a lot of focus.”
The FTSE 15 giant has enjoyed rapid growth in recent years as it shifts its focus away from print products.
The proportion of Relx’s revenue from print products has declined from 37 per cent in 2008 to just 10 per cent last year, with digital formats now making up roughly 75 per cent of its total revenue.
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Chairman Sir Anthony Habgood, who formerly served as chair of court at the Bank of England, said the half-year results reflected the firm’s “positive overall development”.
Relx increased its dividend 10 per cent to 13.6p and said its full-year outlook remained unchanged.
Main image credit: Relx