Experian logs third quarter growth, shuffles boardroom - UPDATE

16th Jan 2014 07:11

- Solid quarterly growth- Strong demand for fraud prevention products- Sees H2 performance similar to Q3Credit checking giant Experian said it delivered good revenue growth in the third quarter after progress across all four of its business lines.Total revenue, at constant exchange rates, for the three months to December 31st grew 7% with organic revenue rising 5% as all regions and businesses improved.Chief Executive Officer Don Robert said: "Notably, our Decision Analytics business grew 16%, fuelled by fraud prevention products and strong sales of our flagship PowerCurve software platform. We have also seen improving conditions in some markets such as the UK, and we're making significant progress on the strategic investments we have made in prior years."As we have previously said, some of our markets have been challenged, with a weak economic environment in Brazil, and softness in US mortgage activity."Otherwise its recent acquisitions in fraud and healthcare have enjoyed a strong quarterly performance. Experian said that looking ahead it expects organic revenue growth for the second half to be at least similar to that in the third quarter. For the full year it expects modestly improved margins, at constant currency, and cash flow conversion of at least 90%.In a separate statement the group confirmed that Chairman John Peace will step down from his role and will be replaced by Chief Executive Officer Don Robert.Chief Financial Officer Brian Cassin will be appointed as Chief Executive Officer and will succeed Don Robert.Analysts at Canaccord said trends apparent at the interim results have remained in place during the quarter and retained their 'sell' recommendation. They wrote: "Experian is being hit by the global macro trends of Emerging Market economic weakness (Brazil) and Federal Reserve tapering policy expectations (hitting the BRL/USD FX rate, increasing long bond yields which have sapped US mortgage demand). Rising interest rates hinder credit growth and hindered credit growth impacts on Experian's growth." Providing a different analysis, broker Shore Capital reiterated its 'buy' and said: "To us, it appears that the contra-cyclical growth drivers in North America are giving way to pro-cyclical forces, with factors such as a strong pipeline in marketing evident and consumer prospects post-rebranding also looking stronger. We expect the North American growth rate to begin to rise again post the start of the new financial year in April."After a conference call with the company said: "The management team confirmed in the analyst call that margins are expected to continue to see some modest improvement, and that cash generation is expected to remain strong to the close of the year and into 2015, with no further major acquisitive activity in sight." "We expect the level of gearing to thus begin to reduce sharply next year, exemplifying Experian's cash credentials. The valuation, at a 2015 p/e ratio of 19.9 times, remains strongly supported by cash flow analysis and we note Experian's global strategic position in 'big data'."Shares in Experian were up 1.04% to 1,162p at 12:57 on Thursday.CJ