Experian Total Group revenue was US$2.3bn for the first half of its fiscal year of 2013. Revenue from continuing activities was up 12% at constant exchange rates and 6% at actual rates, principally due to the depreciation of the Brazilian real against the US dollar.  Organic revenue growth was 8% at constant exchange rates.  Total EBIT from continuing operations of US$590m is up 14% at constant exchange rates and up 6% at actual rates. EBIT margin from continuing activities was up 10 basis points to 25.8%.

Don Robert, Chief Executive Officer, commented:  “We are now in the fourth year of our global growth program and it is gaining momentum. We continue to see significant opportunities and in order to maximize our growth potential we are today launching a new efficiency program to drive operational improvements and to sustain premium growth into the future.”

North America:  In Credit Services and Decision Analytics, Experian is driving growth as it adds new sources of data, expand fraud prevention and identity management and expanding further into strategic customer verticals.  In the health care vertical the appetite grows among hospitals and physician practices for more sophisticated billings system management.  There has also been a notable step forward in the public sector business, where it has secured several new contracts for authentication and eligibility services.  Marketing Services had a slow start to the year, but Experian continues to narrow the scope of residual traditional marketing activities and building a presence in the cross-channel targeted marketing space, a market segment which is growing rapidly.  Consumer Services (previously classified as Interactive services) delivered solid growth, as it evolves its product suite towards identity management and as we have on-boarded a new affinity (white label) partner.

Latin America: The pace of lending has slowed from the exceptionally strong levels last year, but the government in Brazil is undertaking stimulus actions, and credit delinquencies appear to be stabilizing. Experian anticipates economic headwinds, however its business has delivered good growth based on new sources of data and an extension into new sectors such as telecommunications, automotive, insurance and utilities.  Experian is focusing on introducing the full Experian product suite into Brazil, and have it has made progress in Decision Analytics and Marketing Services in the half.

There has also been progress towards the introduction of positive data in Brazil, with the enactment in October of the law regarding the implementation of positive data. Experian anticipates an elapse of between 18 and 24 months for clients to begin using positive data products. Computec performed strongly in underlying terms, delivering good growth in Colombia and Peru, and performing in line with the acquisition buy-plan.

Experian recently announced a conditional agreement to acquire a further 29.6% interest in Serasa, bringing our holding to 99.6%. In addition to the agreed cash consideration of US$1.5bn (plus a cash adjustment to the date of completion), Experian and the shareholder banks have agreed to extend data supply agreements, covering both negative and positive data, and minimum purchase guarantees. We believe these agreements further strengthen our working relationships with the banks and provide a strong foundation for future growth in Brazil.

United Kingdom and Ireland:  In spite of though economic conditions the business has grown. . Experian is investing to sustain future growth, with the launch of new products like BusinessIQ and new sources of data such as a national property database, and it continues to focus on expansion in new customer segments.  While Decision Analytics dipped, as expected, the pipeline is good and it continues to win new contracts for software and anti-fraud products.  Weak external conditions affected Marketing Services, where revenues declined. The stand out performer was Consumer Services (previously classified as interactive), which grew by more than 20%, as Experian continues to benefit from the enhanced consumer proposition. It continues to anticipate good growth in Consumer Services as it further integrates new consumer identity protection features from the recent acquisition of Garlik.

In EMEA/Asia Pacific, revenues have generally held up well in the face of difficult trading conditions in Continental Europe. Growth in Credit Services largely reflects Experian’s spread of businesses, since the majority of its credit bureaus are in markets outside the Eurozone.  Marketing Services also performed exceptionally well, due to adoption of digital platforms across Europe and Asia Pacific.  Decision Analytics, which has higher exposure to financial services, declined.  

Growth and efficiency:   Experian said it was now in the fourth year of its global growth program. The program has been highly successful, and is on course to collectively contribute over 4 percentage points to organic revenue growth in the year ending 31 March 2013, ahead of its previous guidance.  Experian continues to see significant opportunities to drive growth with the goal to maximize its growth potential by investing in a range of initiatives:

  • New customer segments such as the US public sector, healthcare payments, the small and medium enterprise channel and telecommunications, where it is seeing good payback on previous investments;
  • Geographic expansion in high growth markets including Russia, Turkey and Colombia
  • Fraud and identity management, cross-channel marketing campaign management and consumer services, where the opportunity exists to create new products to meet escalating client demand.

Experian has looked strategically at its cost base in light of these growth opportunities. Over the next 18 to 24 months, it is expected to drive a series of operational improvements designed at making itself more nimble and which is to provide a better platform for growth. Examples of efficiencies which it expects to realize include:

  • Increasing the scale of near and off-shoring facilities;
  • Re-balancing resources, for example by reducing exposure to lower growth activities;
  • Re-engineering fixed costs, for example facilities, technology and infrastructure optimization;
  • Rationalization of lower growth legacy products. 

It is expected that the efficiency program will secure gross annualized savings of approximately US$75m. Approximately two-thirds of these savings will be reinvested to drive growth. It expects to realize a proportion of these savings in the year ending 31 March 2014, reaching the full run rate in the year ending 31 March 2015.

Source:  Experian Earnings Release