London Stock Exchange warns of slowing growth in the fourth-quarter


London Stock Exchange Group PLC (LSE:LSEG) said it put in “a strong performance across all divisions” in the third quarter but cautioned growth would slow in the fourth.

Total income in Q3 was up 7.6% year-on-year on a proforma basis and gross profit was 7.3% higher. As previously guided, the group expects total income to grow between 4-5% for full-year 2021. However, fourth-quarter income is not expected to grow as fast as the third quarter on a constant currency basis due to the strong comparator in the final quarter of 2020.

There is no change to previous cost or capital expenditure guidance although supply chain pressures may affect the timing of some technology spend this year, the exchanges operator declared.

The LSE said continued good progress had been made on the integration of Refinitiv, which is “comfortably on target” for a full year run-rate cost synergy delivery of GBP125mln, ahead of the original phasing.

“We continue to execute across a number of workstreams to deliver the target revenue synergies. The group is well placed as we make targeted investments in product and technology enhancements to help us meet the needs of our customers and capitalise on the growth trends driving change across our industry,” said David Schwimmer, the chief executive officer of the LSE.

Steve Clayton, a fund manager at Hargreaves Lansdown, said the acquisition of Refinitiv was an enormous step for the LSE and that successful integration of the data company is critical for LSE investors.

“With that in mind, today’s news is broadly encouraging. Lower Treasury income took the shine off what would otherwise have been a very strong underlying performance but was hardly unexpected. News that capital investment rates could be impacted by supply shortages show that no-one is immune to post-pandemic disruption, but should not hold revenues back in the short term,” Clayton said.

“The group have told the market to expect lower growth for Q4, reflecting a tough comparative from the year before,” he added. “Treasury income should be at its nadir by now, so when interest rates do finally start edging higher, the LSE should be a beneficiary. What we have not seen to date, however, are significant revenue synergies coming from the integration of Refinitiv. The group’s recent Investor Education Event laid out their stall here and LSE’s challenge now is to deliver on those growth ambitions,” Clayton said.

LSE shares were down 4.3% at 7,740p after an hour of trading.


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