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Deutsche Börse AG presented its new mid-term growth strategy Compass 2023 at its virtual Investor Day on 18 November. The Group highlighted that it sees a multitude of growth opportunities in the coming years following the successful implementation of the last mid-term plan Roadmap 2020. Key growth drivers are capital markets trends, which are addressed by Deutsche Börse through its broad and diversified business model. In addition to continued secular net revenue growth, Deutsche Börse plans to increase the net revenue contribution from M&A opportunities going forward.
Theodor Weimer, CEO of Deutsche Börse AG, said: “Compass 2023 defines our strategic direction for the coming years, which is clearly focused on profitable growth. It’s our 10 per cent growth formula: 10 per cent growth annually both in revenues and earnings for the period 2020 to 2023. The long-term trends in the financial markets support our solid growth. They will not greatly be affected by Corona. Corona has a rather cyclical character for us”.
The most important growth drivers for Deutsche Börse include current capital market trends such as OTC to on-exchange, ESG, the increasing importance of the buy-side, the shift to passive investing and digitisation of the financial sector.
Weimer continued: “Like our Group structure itself, Compass 2023 is designed to enable us to react flexibly to changing market conditions. We are proceeding with our strategy of continuous secular growth and intend to accelerate acquisition-driven growth even more. In terms of M&A growth, however, we will always focus on high profitability, which is in our DNA”.
While secular net revenue growth is driven by a broad set of initiatives across all business divisions, M&A growth aims at six areas: index and analytics, ESG, commodities, FX, fixed-income, and investment fund services.
Within the scope of its strategy, Deutsche Börse targets net revenue growth of around 10% on average per annum until 2023. As part of that, secular initiatives are expected to contribute around 5% growth and the M&A contribution is expected to increase to around 5% as well. This includes the contribution from the recently announced acquisition of Institutional Shareholder Services Inc. (ISS). In order to support secular revenue growth and technology leadership ambitions, Deutsche Börse will continue its investments and anticipates operating costs to increase. Absent of cyclical growth, the company expects the EBITDA margin to remain stable at current high levels. As a result, Deutsche Börse expects around 10% average annual EBITDA and earnings per share growth until 2023.
You can download the Investor Day presentation here.
