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Investing.com -- S&P Global Ratings has upgraded the long-term issuer credit rating of Wolters Kluwer (AS:WLSNc) N.V. to ’A-’ from ’BBB+’. The upgrade reflects the robust operating performance and low leverage of the company, which is expected to persist due to the company’s strong business mix and stable financial policy. The short-term rating on the company’s commercial paper has been affirmed at ’A-2’.
Wolters Kluwer’s resilient operating performance and credit metrics, which are largely unaffected by technology and economic cycles, are supported by sound organic growth, stable profitability, and a business model that generates strong free cash flow. This allows the company to maintain a stable debt to EBITDA ratio, adjusted by S&P Global Ratings, of 2.0x-2.2x over the next two years.
The company’s strong business mix and conservative financial policy are key factors in the rating upgrade. Wolters Kluwer’s improved organic growth prospects, stable profitability margins, and strong cash flow support the ’A-’ rating. The company’s long history of moderate leverage also contributes to this rating.
Wolters Kluwer’s business mix is seen as well positioned compared to other data and analytics providers. The company’s consistent operating performance is attributed to the strength and breadth of its product mix, which benefits from mission-critical, deeply entrenched products leveraging proprietary datasets spanning a variety of sectors and regions. The company’s competitive position is seen as broadly in line with peers like RELX and Thomson Reuters (NYSE:TRI).
The stable outlook reflects S&P Global Ratings’ expectation that the group’s adjusted leverage will remain below 2.5x despite ongoing shareholder distributions and potentially higher acquisition spending. This is supported by robust revenue growth of 5%-6% over the next two years, stable profitability, and strong free operating cash flow (FOCF) of about €1.4 billion.
In light of geopolitical uncertainty and a fast-developing AI landscape, Wolters Kluwer is expected to continue its strong operating performance. The company’s strategic direction is not expected to change following the change in leadership, with the new CEO transitioning into the role through 2025 and a formal handover in February 2026.
The ratings could be lowered if Wolters Kluwer’s adjusted leverage increased above 2.75x or FOCF to debt declined below 20% for a prolonged period. This could occur if the group adopted a more aggressive financial policy and pursued transformative debt-funded acquisitions or shareholder remunerations well beyond what is expected in the base-case scenario.
Conversely, the ratings could be raised if the group commits to a more conservative financial policy that would help it maintain adjusted debt to EBITDA below 2.0x. An upgrade would also be contingent on Wolters Kluwer maintaining its consistent operating performance, characterized by stable organic revenue growth and profitability margins, and low capex intensity.
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