Theodor Weimer: Letter from the CEO

Dear shareholders,
ladies and gentlemen,

Last year, the strategy that we have been pursuing with regular updates for many years bore fruit again. We delivered very good figures and significantly exceeded the targets that we set at the beginning of the year. And with the decisions taken as part of Horizon 2026, the most recent update to our strategy, we have created a strong basis from which to develop in the years ahead. 

The world in 2023 was dominated by Russia’s ongoing war of aggression against Ukraine, the terrorist attack on Israel and the military response to it, the immeasurable suffering on both sides, and not least by a resurgence of populist politics and extremist tendencies in many democracies around the world. For the market participants that operate in this world, we at Deutsche Börse Group are not only a pillar of stability, but also an engine of change. Because we create trust in the markets of today and tomorrow, and we enable innovation through investment by creating access to capital markets.

Despite this environment, the price fluctuations on the securities markets organised by us were lower last year than they have been for a long time: they were down by more than a third on the previous year, as measured by the VSTOXX® index. In the past, this would necessarily have resulted in lower revenues and profits for us, but that is no longer the case today. And that is not only good news for our workforce, but also – and especially – for you, our shareholders.

How did this development come about? We have consistently increased the share of our recurring income in recent years, taking it to 63 per cent last year. This is an achievement I am proud of, and on behalf of the entire Executive Board, I would like to take this opportunity to thank all the employees of Deutsche Börse sincerely for their dedication. 

In particular, I would like to express my gratitude for the success we had in initiating and completing the biggest transaction in our company’s history by taking over the global software business SimCorp last year. It contributed 5 percentage points to our net revenue growth. This is almost one third of our total growth in net revenue. And with an increase of 17 per cent overall in 2023, this growth was gratifyingly strong. 

The increase was also driven by organic growth with a strong secular – which means long-term – component. Here we reported an increase of 5 per cent. This secular growth was particularly marked in energy trading, where we gained additional market share and new customers. Then there were the strong tailwinds from rising interest rates. They benefit interest rate derivatives, but above all our net interest income. A total of 7 percentage points of our growth was due to these cyclical influences. 

Since we had our costs under control at the same time, despite higher capital expenditure, our pre-tax profits – or EBITDA – rose sharply by 17 per cent, the same amount as net revenues.

In the course of the latest update to our strategy in the context of Horizon 2026, we have modernised our dividend policy. We have adjusted the range within which we distribute a dividend, which is now set at 30 to 40 per cent of profits. This leads on seamlessly from our performance in recent years and takes the further expected significant profit growth into account. And for the first time, we are also promising you that the dividend per share will go up every year. So for 2023, we are proposing a dividend of €3.80 per share. This is 6 per cent more than in the previous year and represents around 40 per cent of our profits. Share buybacks are now also part of our capital allocation strategy again. We already started in early 2024 and will be returning the record sum of €1 billion to you this year: €700 million via the dividend and €300 million via share buybacks.

What else is coming up in 2024? We expect our net revenues to go up to more than €5.6 billion. And our forecast for EBITDA is more than €3.2 billion. This already includes the possibility of moderate interest rate cuts by central banks.

Further sustainable growth is now on the horizon. Our new Horizon 2026 strategy consists of three elements. First: we are banking on strong growth of 10 per cent per year; of which 7 per cent p.a. will come from our existing businesses, and our acquisition of SimCorp has already contributed another 3 per cent p.a. on average. Second: we have created a new segment: Investment Management Solutions (IMS). This comprises the software and analytics business of SimCorp and Axioma, as well as the index, data and sustainability business of ISS STOXX. IMS is our new strategic cornerstone, with great potential for organic growth and strong recurring revenues. It enables us to address the buy side, i.e. institutional investors, as direct customers. This is a market with above-average, secular growth. Third: we are expanding our digital platforms for existing and new asset classes. The partnership with Google Cloud that we also initiated last year plays a crucial role here. 

I am certain that with this strategy, Deutsche Börse is well equipped for more successful years of strong growth. We know where we want to go. And I promise you this on behalf of the entire Executive Board – we will not be resting on our past successes. 
 

Yours,

Theodor Weimer

Frankfurt/Main, 15 March 2024