Warning On Supply Chain Shortages Issued By London Stock Exchange

After a stable third quarter, it was on schedule to achieve cost savings from the integration of data platform Refinitiv, the London Stock Exchange Group said but cautioned that the timing of its technological expenditure could be affected by supply chain bottlenecks.

In the three months to the end of September, its pro forma underlying income was 1.78 billion pounds ($2.46 billion), compared to 1.75 billion for the same period a year earlier, the exchange said. This was driven by increased volumes of stock trading and initial public offerings, according to the exchange.

With a drop in earnings from its Trading & Banking solutions division, its data and analytics section, which also includes Refinitiv, saw a 0.3 per cent drop in pro forma income.

“We are making excellent progress on the integration of Refinitiv and are comfortably on track to achieve 125 million pounds of cost synergies in 2021, ahead of our original phasing,” Chief Executive David Schwimmer said in a statement.

LSEG stocks dropped by as much as 4.2 per cent before closing in down by 3.5 per cent.

LSEG forecasted revenue growth of 4-5 per cent in the year to April, although revenue growth in the fourth quarter would be slower than in the third quarter on a constant currency basis, the exchange said.

Supply chain difficulties “may effect the timing of some of the technology expenditures this year,” it warned, without providing more specifics, while the exchange noted no change in its previous cost or capital expenditure plans.

In 2018, a consortium led by Blackstone carved out Refinitiv out of Thomson Reuters, the parent company of Reuters News, before being acquired by LSEG in a deal worth $27 billion deal and which was completed in January 2021.

Schwimmer is attempting to turn LSEG into a one-stop shop for data, trading, and analytics with the acquisition, albeit some investors have been troubled with the expenses of absorbing the data provider.

Since the beginning of March, when statements regarding the expense of the Refinitiv integration alarmed some investors, LSEG’s stock has dropped roughly 17 per cent.

Refinitiv pays Thomson Reuters for news it distributes, and Thomson Reuters now has a minority position in LSEG.

(Adapted from Reuters.com)

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