MANAGEMENT CONTINUES TO BE CAUTIOUS ABOUT IMMEDIATE OUTLOOK

Experian managed to report organic growth based on constant exchange rates in the second half, driven by strength in emerging markets, good progress on countercyclical initiatives and strong performances in non-financial verticals.  At constant exchange rates, total revenue growth for the half was 5%, with organic revenue growth of 4%.  For the full year the company expects to achieve its objectives of broadly maintaining margins, growing profits and generating strong cash flow, while delivering a good earnings outcome. At actual exchange rates the overall growth was down -6%.

Management stated that it sees some signs of stabilization in the financial services sector which it hopes to translate eventually into improved consumer lending activity.  For now, the environment remains fragile, and we continue to be cautious about the immediate outlook for organic revenue growth.  Following the announcement Experian’s shares fell 16¾p to 450p on the London Stock Exchange.

In the six months to 31 March 2009, revenue from continuing activities at Experian increased by 5% at constant exchange rates. Group organic revenue growth was 4% year-on-year (Q3 +5%, Q4 +3%). By principal activity, organic revenue was up 2% at Credit Services, up 3% at Decision Analytics, flat at Marketing Services and up 10% at Interactive. Acquisitions contributed 1% to revenue growth.

50% of Experian’s revenues come from financial services sector in the USA and the UK, which are negatively impacted by the credit freeze.  Experian’s aim is to seek solace in diversification (industry verticals and geographic expansion).  It achieved notable growth from its consumer direct business, which provides online credit scores for consumers in return for a monthly fee.  This business has seen subscribers in the UK increase from about 800,000 a year ago to 1.5m and in the US increase from 7m a year ago to 9m.  It has also seen strong growth in credit checking in emerging markets such as Brazil, where organic revenue in credit services rose 16 per cent.  In the UK growth from credit services was flat, although it has managed to offset the fall by providing credit checking to sectors such as utilities and insurance.  Experian however cancelled its plans to launch a credit bureau in Canada.  Source: Experian Press Release

BIIA Newsletter April 2009 Issue