Global information services group Experian (EXPN) has raised its guidance for the full year to organic revenue growth of between 7 and 8 per cent, up from the 6 to 8 per cent initially expected. While the first half of the 2020 financial year saw a more mixed performance in the larger business-to-business division – organic growth across all geographies in ‘data’ contrasted a flat overall performance in ‘decisioning’ – consumer services posted an impressive 11 per cent like-for-like organic revenue growth.
The launch of ‘Experian Boost’ has enabled consumers to bolster their credit files with non-traditional data sources such as utility and mobile phone bills. In the US, this contributed to a quadrupling of revenue in the group’s credit matching service. Yet introducing this new product has come at a cost. Together with higher depreciation on technology investments, the upfront investment in the roll-out squeezed the operating profit margin by 0.5 percentage points to 26.9 per cent.
With $437m (£337m) spent on acquisitions, net debt has increased by 16 per cent to $4.1bn – although at 2.4 times adjusted cash profits this is still within the target range of a multiple between 2 and 2.5. However, a $317m working capital outflow meant free cash flow plunged by almost two-thirds to $124m, well adrift of broker Jefferies’ estimated $463m.
Bloomberg consensus forecasts place adjusted pre-tax profit at £1.27bn and EPS at 107p for the full year, rising to £1.39bn and 118p in 2021.
| EXPERIAN (EXPN) | ||||
| ORD PRICE: | 2,429p | MARKET VALUE: | £22.1bn | |
| TOUCH: | 2,429-2,430p | 12-MONTH HIGH: | 2,641p | LOW: 1,770p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 39 | |
| NET ASSET VALUE: | 254¢* | NET DEBT: | 166%** | |
| Half-year to 30 Sep | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 2.36 | 470 | 35.3 | 14.0 |
| 2019 | 2.50 | 480 | 39.0 | 14.5 |
| % change | +6 | +2 | +10 | +4 |
| Ex-div: | 02 Jan | |||
| Payment: | 31 Jan | |||
£1=$1.28 *Includes intangible assets of $6.1bn, or 666¢ a share **Excludes lease liabilities of $222m | ||||
