Join our community of smart investors

Experian holds firm on dividend

However, the group expects a hit to organic revenue growth during the first quarter of its 2021 financial year
May 20, 2020

Experian (EXPN) saw organic revenue rise by 8 per cent at constant currencies in the year to 31 March, with double-digit increases in North and Latin America. The credit data provider's adjusted operating profit increased by 9 per cent to $1.4bn (£1.1bn), and despite erosion in the UK and Ireland, the overall margin decline was limited to 0.1 percentage points to 26.8 per cent.

IC TIP: Buy at 2,748p

The business-to-business division continued to gain momentum from new modules added to the Ascend platform, with the cumulative total contract value for Ascend reaching $313m. Over in consumer services, the adjusted operating jumped by almost a fifth to $257m, as Experian Boost helped drive the US free membership base from 19m to 29.5m.

The Covid-19 pandemic meant organic revenue growth dropped 5 per cent in April, and Experian has warned of a 5-10 per cent contraction in the first quarter to 30 June if global government lockdowns continue. This could widen to 15 per cent if exchange rate volatility persists, in particular a weaker Brazilian Real.

Higher capital expenditure and a more than doubling of money owed by customers also meant underlying free cash flow fell 15 per cent to $774m. Meanwhile, on the back of $700m of acquisitions, net debt rose by almost a fifth to $3.9bn (excluding lease liabilities). At 2.2 times adjusted cash profits, this is at the lower end of a target multiple range of between 2.2 and 2.5. In order to preserve cash, the $400m share buyback programme has been suspended, although confidence in its outlook beyond this crisis means the second half-year dividend has been held steady.

EXPERIAN (EXPN)   
ORD PRICE:2,748pMARKET VALUE:£24.8bn
TOUCH:2,747-2,749p12-MONTH HIGH:2,926pLOW: 1,824p
DIVIDEND YIELD:1.4%PE RATIO:45
NET ASSET VALUE:252¢*NET DEBT:£4.1bn**
Year to 31 MarTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)
20164.240.9778.640.0
20174.331.0792.141.5
20184.580.9588.844.8
20194.860.9676.946.5
20205.180.9475.047.0
% change+7-2-2+1
Ex-div:25 Jun   
Payment:24 Jul   
£1=$1.23, *Includes $6.1bn in intangible assets or 679¢ a share, **Includes £233m in lease liabilities