Wolters Kluwer Results Look Stable; Not Likely A Spread Mover

Rating: A3/BBB+ EUR Spreads +0-1bp

Unclear what’s driving the equity move given little in the way of consensus available, but the results look broadly stable from a credit perspective; steady growth at the group level, better margins and only slightly higher leverage. Q2 FCF looks soft though this is attributed to vendor payment timings so doesn’t seem a cause for concerns.

• H1 revenues +6% YoY organically was in line with the Q1 growth rate and broadly in line with the 6.1% BBG consensus (albeit with just four estimates). Organic growth rates look to have disappointed across three of the five divisions though with Legal & Regulatory offsetting misses in Health, Tax and Corporate Performance. Breaking down by geography, North America (two-thirds) and Europe (one quarter) were in line with the group at +6%. Op profit margin +40bps vs. H123.
• H1 FCF was -10% YoY despite Q1 results implying a YoY increase though the decrease was described as reflecting vendor payment timing. EBITDA leverage was 1.6x from 1.4x at Q1 and 1.5x at H123 against a LT target of ~2.5x
• FY guidance confirmed.