Following their October press announcement (BIIA October Newsletter) Experian released its first half of 2008 financial results in November, reporting good revenue, profit and cash flow progress, reflecting balance and  diversity of the Group.  Total revenue growth of 13% at actual exchange rates to US$2,017m. Revenue from continuing activities up 11% at constant exchange rates to US$1,987m. Organic revenue growth of 3%.

Total EBIT growth of 8% at actual exchange rates to US$476m. Continuing EBIT up 8% at constant exchange rates.  EBIT margin of 22.8% from continuing activities (2007: 23.0%), excluding FARES contribution.  Profit before tax of US$318m. Benchmark profit before tax of US$416m, up 9%.  Basic EPS of 25.5 US cents. Benchmark EPS growth of 8% to 30.7 US cents. Strong cash conversion of 83%, in traditionally weaker half of year.

Strong performances in Latin America, Consumer Direct and Decision. Analytics offset market challenges in US and UK Credit Services.  Cost efficiencies ahead of schedule with US$29m contribution in the first half of the year. Additional savings identified; target raised to US$130m annualized.

John Peace, Chairman of Experian, said:  “Experian performed well in the first half, delivering good revenue, profit and cash performances, even though market conditions were exceptionally challenging. The Group has strengthened its market position, and is well placed to grow through the current global economic cycle.”  Source: Experian Press Release

According to an article in the Financial Times of November 19th, 2008, Don Roberts, CEO stated that its counter-cyclical businesses, especially debt recovery services would help provide “the cure for the credit crisis”.  However he admitted the company’s most profitable arms were likely to struggle.   The FT commented:  “Investors are unsure about Experian’s prospects.  First, neither Experian nor its main competitor, Equifax, has been through a recession before and nobody is sure how this business model will cope.  Second, any strong growth reported this year is compared with week comparatives last year.”  

It can be said that nobody in the industry has never managed during a prolonged down period.  Management has got used to long spells of growth periods and growth through acquisitions.  The FT now questions whether management will be able to manage during a prolonged recession with negative growth rates.  Source: Experian Press Release / Financial Times

BIIA Newsletter November 2008 Issue