Credit where credit's due: this was a strong set of first-half results from Experian and the company's share price spiked 6 per cent as a result. Strip out fair value movements on derivative financing, and adjusted pre-tax profits increased 12 per cent to $450m (£353m) as the credit checking specialist benefited from strong organic sales growth.
This was most prominent in the Latin America business, which reported 22 per cent underlying revenue growth as Brazil's middle class continued to burgeon and the group successfully offered value-add data services to small- and medium-sized businesses. Importantly, the largest revenue segment, US credit services, returned to growth after 11 quarters of decline which helped North American revenues increase 6 per cent. Across the pond, the decision to diversify UK & Ireland sales away from financial services proved sound as the sector declined 20 per cent. Increased business with the public sector, telecoms and utilities helped overall revenues in the region stay broadly flat.
Net debt increased in the period by $262m as the group spent $226m on acquisitions and upped capital expenditure. Finance director Paul Brooks expects cash conversion of about 90 per cent at the year-end as well as further organic growth and an increased margin.
Seymour Pierce forecasts full-year pre-tax profits of $875m and EPS of 64.1¢ (67.1¢ in 2010).
Experian (EXPN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 749p | MARKET VALUE: | £7.58bn | |
| TOUCH: | 748-749p | 12-MONTH HIGH: | 764p | LOW: 559p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 230c* | NET DEBT: | 76% | |
| Half-year to 30 Sept | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 1.87 | 316 | 24.5 | 7 |
| 2010 | 2.00 | 283 | 25.9 | 9 |
| % change | +7 | -10 | +6 | +29 |
Ex-div: 29 Dec Payment: 28 Jan *Includes intangible assets of$4.95bn, or 489¢ a share £1:$1.59 | ||||
