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RELX’s first-half results ease concerns over German and Swedish universities dispute

Analysts had thought that a stand-off between RELX and universities in Germany and Sweden could hit revenues, but that proved not to be the case in the publisher’s half-year results
lecturer in library
Publishing research journals and academic journals is still the biggest revenue driver for RELX

Online publisher RELX PLC (LON:REL) zipped higher on Thursday morning as its first-half results eased concerns that a stand-off with German and Swedish universities is hurting business.

The FTSE 100 group, which, among other things, publishes academic journals, has been at loggerheads with research institutions in the two countries for a while now, with some not renewing their subscriptions in protest at what they see as poor value for money.

Academic publishing sales rise

Analysts had thought that the dispute could hit revenues at Elsevier – RELX’s largest division and the one responsible for scientific, technical and medical publishing.

But that part of the business saw revenues rise 3% in the opening six months of the year to £1.19bn (H1 17: £1.16bn).

Total revenue fell 1% to £3.65bn (H1 17: £3.70bn), largely due to a poor performance in RELX’s risk and business analytics arm. Adjusted profits were broadly flat at £1.15bn (H1 17: £1.15bn).

On an underlying basis though, revenue rose 4% though, while adjusted underlying profits jumped 6%.

‘Good progress’

“We achieved good underlying revenue growth in the first half of 2018, and continued to generate underlying operating profit growth ahead of revenue growth,” said chief executive Erik Engstrom.

“We continued to make good progress on our strategic objectives. Our number one priority remains the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers.

“We have also had an active first half for acquisitions, focusing on targeted data sets, analytics and assets that support our organic growth strategies.”

As for its outlook, RELX said it remained “confident” that it will deliver another year of underlying revenue growth and adjusted operating profit.

Universities dispute ‘the main story of the stock’

“The main story today and what will please the market is that the Scientific Publishing area, STM or Elsevier, has seen an accelerated organic revenue growth of +3% vs +2% for 2018,” wrote Liberum in a note to clients.

“Part of this is due to print declines moderating but what this will do is ease a lot of the concerns that the recent disputes over journals with the German and Swedish universities have impacted organic revenue growth, which has been the main story around this stock.”

The City broker added: “Other divisions look in line [and] guidance (continued growth) maintained but we do think the key driver of the stock today will be this accelerated revenue growth at STM.”

RELX shares were up more than 3% to 1,729p in early deals on Thursday.

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