Credit checking specialist Experian has been hit hard by the slowdown in the US economy, but the company's ability to generate cash meant it was able to reduce its net debt ahead of the market's expectations.
The low volume of global lending resulted in less demand for Experian's credit services: organic sales growth was an anaemic 2 per cent and flat in the US. So improvement in profits was mainly driven by strong margin gains in the UK, Irish and Latin Amercian operations. However, net debt fell by nearly $483m (£338m) to $1.62bn, well ahead of the $1.7bn the City had forecast. This was possible because of a high level of cash generation - free cashflow was up 11 per cent to $818m. That's allowed management the freedom to increase both the dividend and launch a new $300m share buy-back programme.
Chief executive Dan Robert acknowledged there were still significant economic headwinds in some of Experian's territories. However, he said there were signs of a gradual recovery in key markets and guidance is for mid-single digit earnings growth for 2011.
Subject to review broker Charles Stanley forecasts EPS of 67 cents for 2011 (2010: 59.8 cents).
EXPERIAN (EXPN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 605p | MARKET VALUE: | £6.21bn | |
| TOUCH: | 604-605p | 12-MONTH HIGH: | 665p | LOW: 434p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 15 | |
| NET ASSET VALUE*: | 222¢ | NET DEBT: | 67% | |
| Year to 31 Mar | Turnover (US$m) | Pre-tax profit (US$m) | Earnings per share (US¢) | Dividend per share (US¢) |
|---|---|---|---|---|
| 2006 | 3.06 | 550 | 108.0 | Nil |
| 2007 | 3.48 | 394 | 35.1 | 17.0 |
| 2008 | 3.79 | 521 | 41.1 | 18.5 |
| 2009 | 3.87 | 578 | 46.8 | 20.0 |
| 2010 | 3.88 | 661 | 59.8 | 23.0 |
| % change | - | +14 | +28 | +15 |
Ex-div: 23 Jun Payment: 23 Jul *Includes intangible assets of $4.64bn, or 452 cents a share £1=US$1.44 | ||||
