(AOF) – Euronext unveiled results down in the fourth quarter. Over this period, the pan-European stock market saw its adjusted EBITDA fall by 12% to 187.9 million euros, showing a margin of 54.1%, down 3.5 points in published data and 3.7 comparable points. Adjusted costs reached €159.2 million, up 2.1% like-for-like. Euronext’s consolidated revenue reached 347 million euros, down 6.2%. Like-for-like, it fell by 6.1%.
The net debt to Ebitda ratio stood at 2.6 at December and the adjusted net debt to Ebitda ratio at 2.4.
In 2023, Euronext is targeting around €630 million in adjusted costs compared to around €620 million on an annual basis in the second half. Euronext increased its annual pre-tax synergies linked to the integration of the Borsa Italiana group by 15 million euros, bringing them to 115 million euros in 2024.
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Key points
– First European financial center created in 2000, present in 23 states, bringing together the regulated markets of Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris, as well as several platforms;
– Revenues of €1.3 billion, split between transactions for 35%, listing for 14%, advanced data services for 14% and custody & settlement-delivery for 17%…;
– Growth model based on 5 pillars: strengthening of the value chain, expansion of the platform offer, expansion of the offer in quotations, innovative products and services, strengthening of positions in sustainable finance and pursuit of external growth;
– Open capital with reference shareholders holding 23.81% of the shares -ABN Amro, Caisse des dépôts, Cassa Depositi e Prestiti, Euroclear, Federale participatie and Intesa San Paolo;
– Company incorporated under Dutch law, Stéphane Boujnah being Chairman and Chief Executive Officer of the 9-member Board of Directors;
– Maintenance of financial solidity after the purchase of Borsa Italia, with a leverage effect reduced to 2.6, hence an increase in the debt outlook in the spring.
Challenges
– “Growth for impact 2024” strategy: annual growth of 3-4% in turnover and 5-6% in operating income / maintenance of the dividend policy (rate of 50%) and investments (3 -5% of turnover) / synergies with the Milan Stock Exchange of €100 for integration costs estimated at €160 million;
– 4 priorities for the innovation strategy – digitalization, deployment of information sharing and co-design, strengthening the efficiency of central technologies and integration of innovations such as tokenization, tailor-made trading models, etc.;
– Environmental strategy on 2 pillars, internally the reduction of the carbon footprint and, for clients, an expansion of the service offer, accelerating the transition to sustainable finance: expansion of the offer of ESG indices in partnership with rating agencies or created at the request of certain clients / Reinforcement of Europe’s leading position in the offer of ESG investment vehicles – ETFs, investment funds, “green” bonds, derivatives, etc. and, in 2022, proposal of products and standards for commodity contracts / support for issuers in their ESG transition;
– Maintaining competitive advantages – a single platform for transactions on European regulated markets and a range of services covering all the needs of financial market participants;
– High capacity for innovation, operating margin higher than that of its European competitors and speed of execution of integrations.
Challenges
– Weight and volatility of European regulation;
– After the record of 212 IPOs in 2021, strengthening of attractiveness via ESG indices, the listing of innovative companies and the offer of pre- and post-listing services;
– Completion of 3 major operational projects: migration of data centers in Bergamo and of cash & derivatives to the Optiq trading platform and European expansion of clearing activities;
– 2022 target, raised after a record first quarter: decline in operating costs to €612 million;
– 2021 dividend of €1.93, i.e. a payout rate of 50%.
The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.