These are uncertain times. So, we should not be too surprised when a company seems unsure about its immediate prospects. That even applies to an outfit like Experian (EXPN), whose stock-in-trade is credit scoring - statistical analysis designed to assess creditworthiness on future obligations.
Excluding currency movements, the group recorded a marginal fall in year-on-year revenue for the first quarter of FY2021, with contractions in the UK and Ireland offset by strengthening performance in North America, which accounts for nearly two-thirds of the top-line.
Trading in Brazil also held up, presumably because President Jair Bolsonaro has been more intent on keeping the domestic economy ticking along than many of his international counterparts. However, the locale’s contribution to reported revenue was constrained by the weakness of the Brazilian Real relative to the US dollar.
Overall, it was a solid showing when you consider that trading was conducted during the period in which normal commercial activity was severely disrupted through public health policies.
Lenders in the UK and Ireland have become more circumspect, implementing tighter credit policies at a time of unprecedented government intervention in the economy. A contraction in discretionary spending was accompanied by reduced data demand from advertisers and a virtual shutdown of the auto market. The decline in credit reference volumes fed through to a 15 per cent fall in organic B2B revenue, while sales linked to consumer services were down 18 per cent.
The group has seen a partial retracement in domestic business volumes, but the fear is that both business and consumer confidence have taken such a dent that a significant proportion of the lost business may never return. Certainly, we are unlikely to witness an increase in consumer borrowing if the fear of unemployment takes hold – a situation which has not been in evidence for some time, as the jobless rate has been gradually falling since 2011.
Experian’s crystal ball may be looking a little opaque now, but management expects organic revenue will either flatline through the second quarter or conceivably fall by perhaps as much as 5 per cent with no change to cost assumptions. Trading in the Americas provides cause for optimism, though we will not see a uniform recovery in economies across the EMEA/Asia Pacific regions.
