Credit checking agency Experian delivered first-half trading profits 5 per cent ahead of consensus estimates, despite a backdrop of weak loan markets in its core markets. Slashing group administrative expenses by 14 per cent to $466m helped bolster Experian's profit margin by 80 basis points to 24 per cent and maintain trading profits at $478m (£285m), even though revenues declined 7 per cent.
Management cite the "weak market for credit origination" to explain a 2 per cent year-on-year fall in organic revenue, and just a 2 per cent uplift in cash profits to $307m, at the group's core North American operation. It was much the same story in the UK and Ireland where revenue performance was flat in constant exchange rates and trading profits rose a pedestrian 5 per cent. In stark contrast, the group's developing operations powered ahead, with Experian's Latin American business, for instance, boosting profits 30 per cent to $75m, while its EMEA/Asia Pacific unit managed a 27 per cent hike in profits in the period to $19m.
Experian cut $62m from its net debt pile in the half to $2.05bn and supported by free cash flow of over $750m, analysts at UBS expects a reduction in borrowings to less than $1.7bn by the year-end. The broker expects adjusted full-year EPS to rise from 62¢ last year to 65¢.
More analysis of company results
EXPERIAN (EXPN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 601p | MARKET VALUE: | £6.2bn | |
| TOUCH: | 600-601p | 12-MONTH HIGH: | 604p | LOW: 301p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 203¢* | NET DEBT: | 92% | |
| Half-year to 30 Sep | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 2.02 | 318 | 25.9 | 6.75 |
| 2009 | 1.87 | 351 | 25.3 | 7.00 |
| % change | -7 | +10 | -2 | +4 |
Ex-div: 2 Jan Payment: 29 Jan *Includes intangible assets of $4.7bn, or 460¢ a share £1=$1.68 | ||||
