London Stock Exchange shares dip on Q4 growth warning

London Stock Exchange profits climb by more than 7% but shares dip on warning of weaker end to the year

  • LSE saw growth across all of its business divisions in the third quarter
  • It has continued to make ‘good progress’ on the integration of Refinitiv
  • But  Q4 income is ‘not expected to grow as fast’ amid supply issues

London Stock Exchange shares moved 3.5 per cent lower today after the bourse warned investors it expected growth to be weaker in the final quarter of 2021.

But LSE reported strong growth for the third quarter of the year, posting a 7.6 per cent rise in income and a 7.3 per cent rise in gross profits to just under £1.6billion.

It expects total income to grow between 4 and 5 per cent for 2021 but LSE said fourth-quarter income is ‘not expected to grow as fast’ as the previous quarter, adding that ‘supply chain pressures may impact [the] timing of some technology spend this year’.

Income is expected to be impacted in the fourth quarter amid supply chain issues

The bourse saw growth across all of its divisions in the third quarter and was buoyed by the acquisition and integration of data firm Refinitiv, which it bought earlier this year.

LSE said it had continued to make ‘good progress’ on the integration of Refinitiv and it is ‘comfortably on target for full year run-rate cost synergy delivery of £125million’.

Its data and analytics business saw revenues grow by 6 per cent, driven by subscriptions, while capital markets revenue shot up 17.2 per cent thanks in part to strong sales in its Tradeweb division.

Post trade revenue grew 11.5 per cent on the back of increased clearing activity from both new and existing customers.

LSE boss David Schwimmer said: ‘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.’

LSE shares are down 3.5 per cent to 7,804p this morning, bringing total losses for the year to 15.6 per cent.

Hargreaves Lansdown Select fund manager Steve Clayton said the successful integration of Refinitiv is ‘is critical for LSE investors’, adding that today’s results are ‘broadly encouraging’.

He added: ‘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.

‘The group have told the market to expect lower growth for Q4, reflecting a tough comparative from the year before, but with cost synergies coming in strongly, we expect that the market will take this in its stride.

‘When interest rates do finally start edging higher, the LSE should be a beneficiary.’