CEO and Chairman
“In an environment where there is a tighter supply of resources, professionals are asked to address an increasing number of issues. They require support to accomplish more and deliver better results in a shorter timeframe. Helping our customers deal with complexity and be more productive are our core strengths.”
2010 was a year of successes for Wolters Kluwer. We advanced the transformation of our portfolio and broadened our geographic footprint. grew 4% to €3,556 million, supported by 3% organic growth in electronic and service subscriptions and improved retention rates across all markets. Profitability also improved in 2010 as our margins increased to 20.4% as a result of better underlying growth, the continued shift towards higher-margin online and software products, and the contribution from our Springboard initiatives. Our free cash flow accelerated to €445 million, allowing us to distribute additional returns to our shareholders with a proposed increase in our and a share buy-back program.
These results took place against the backdrop of a slow recovery of the world economy and market trends that increase the demand for our products and services globally. We are pleased with our progress and will continue to invest in high-growth segments, focus on online and software solutions to drive innovations, and accelerate the globalization of our business.
Market Trends Support Growth
Overall market trends continue to be favorable for Wolters Kluwer. In 2010, our businesses benefited from the proliferation of information and regulations, the unification of global standards and compliance rules, and an increased focus by our customers on productivity and cost effectiveness. All of our markets, from financial services and health to legal and tax, saw an increasingly complex regulatory environment. In the U.S., for example, more than 18,200 laws or regulations that affect the insurance industry were changed or created in 2010. This regulatory activity is not limited to the U.S., but is also taking place in multiple countries and regions around the world. The trend towards global standards adds yet another layer of complexity. For our customers, keeping track of regulatory change and staying compliant in all geographies is a significant challenge, and creates attractive growth opportunities for Wolters Kluwer.
Wolters Kluwer also benefited from the drive by our customers to increase their productivity and cost effectiveness. In the healthcare sector, for example, there is a growing pressure on practitioners to deliver better outcomes and increase patient safety at lower cost. At the same time, there is a broader societal and governmental desire to widen access to quality health care. This further increases pressure on healthcare providers. In this context, our clinical solutions and information tools like the ProVation Medical product line and UpToDate raise the quality of care and improve productivity. This segment of our business grew at healthy double-digit rates in 2010.
These global trends set the conditions in which our professional customers operate. In an environment where there is a tighter supply of resources, professionals are asked to address an increasing number of issues. They require support to accomplish more and deliver better results in a shorter timeframe. Helping our customers deal with complex regulatory change and be more productive are our core strengths.
Growth and Innovation
At the end of 2009, we introduced our strategy for . After the first year of execution, I am greatly encouraged with our progress. We have launched many new products and stepped up our efforts to serve both mature and emerging markets alike. We structured our organization to align with our global markets, bringing together our deep local expertise with global tools and approaches to better serve our customers.
“We have made substantial progress in 2010 to expand our global presence in key markets”
Driving our growth strategy forward is my main priority as CEO. One of the most engaging parts of my work is to hear from customers about how the changes in their industry provide them with new business opportunities. Exploring how Wolters Kluwer can support our customers in that journey is personally very exciting and drives our momentum in innovation. Our strong performance in 2010 provides a foundation from which to grow. We expect to build on this momentum in 2011 to drive improvements in top-line revenue growth and profitability.
Our focus remains on the transformation of our portfolio towards higher-value electronic products. Electronic revenues grew 7% in 2010 as our customers continue to adopt information tools and software. Today, nearly 70% of our revenues come from online, software, and service offerings. Driving innovation to develop products that help our customers deliver high-quality results is at the center of our strategy. We will continue to invest 8-10% of our revenues to deliver new and enhanced products that meet our customers’ changing needs.
Fast changes in the technology landscape, like tablets and semantic search, also open new avenues for growth. By 2013, more people will access the internet on mobile devices than from desktops. Reshaping and transferring our products to mobile devices that reach our customers at their point-of-use creates new possibilities. Some products will be enhanced as they migrate to these devices while other products will be rejuvenated on tablet devices and their life will be extended. We have launched several initiatives across the company to take full advantage of this trend.
Another priority is to continue to fuel growth through Wolters Kluwer’s . During one of my visits to China, I had the opportunity to meet with several of our local partners and professional groups. The pace of change in China is impressive and the growth potential of this market offers Wolters Kluwer several opportunities for expansion. We have established many new partnerships in China, including a joint-venture with Medicom, the leading Chinese drug information provider, announced in early 2011. This partnership positions us well for delivering the next-generation of drug information. The evolution of our business in China is indicative of our focus on customer value in all of our markets.
I am pleased with the substantial progress we made in 2010 to expand our presence in key markets. Our organic growth in emerging markets was strong, with China growing over 20%. Some products like UpToDate grew 26% internationally from a well-established base. Acquisitions were also an important part of the expansion of our global presence, including Edital which has extended our global trademark business, and FRSGlobal, which has established our leadership in the risk management area in over 45 countries. Going forward, we will continue to invest to extend our positions in these higher-growth geographies.
Management at Wolters Kluwer is privileged to be surrounded by customers, partners, and authors that have a similar goal: to deliver value to the societies we live in. Today, our take the offline conversation with customers online; our authors interact with peers on expert blogs; and the professional societies we partner with use social media to strengthen their ties and improve their market positions.
On behalf of the , I would like to take this opportunity to extend our sincere appreciation to our employees around the world for their efforts to create powerful solutions that serve our customers’ needs. We also value the commitment of our shareholders to our company’s long-term growth. Our aim is to continue to deliver significant value for all our stakeholders: our customers, shareholders, employees, and society at large.
The Board of CACFO, the Chinese Association of Chief Financial Officers, welcomed Nancy McKinstry and Shasha Chang, CEO Wolters Kluwer China, at their Beijing offices
“The evolution of our business in China is indicative of our focus on customer value in all of our markets”