Experian records robust results but warns of Brazil and US headwinds

7th May 2014 08:56

- Total revenues up 4.0 per cent- EBIT up 8.0 per cent- EBIT margin up 30 basis points- H1 2015 constrained by headwindsCredit information group Experian delivered solid growth in the year to March but said there were headwinds in Brazil and the US affecting immediate prospects.Chief Executive Don Robert said: "In the short term, we face a number of one-off headwinds, most notably a subdued trading environment in Brazil over the World Cup and the revenue impact of the changes we are driving in North American Consumer Services, which together will constrain growth in the first half."Earlier this year in North America, Experian began to shift marketing efforts away from its 'free' brands and putting investment behind the stronger brand, Experian.com. After an "encouraging" response, it is now taking further steps to accelerate the move but growth in Experian.com is "not yet of sufficient size to fully offset attrition rates in the free portfolio", and so fourth quarter revenues declined and are expected to continue in the first half."We expect a return to more normal levels of organic revenue growth as the second half of the year progresses," Robert said.He added that for the new year the group expects "at least" to maintain margins, deliver earnings per share growth and to exceed 90% cash flow conversion.For full year just past, total revenue growth from continuing activities was 4% at actual exchange rates to $4.8bn.Total earnings before interest and tax (EBIT) from continuing activities was up 8% to $1.3bn, with EBIT margin from continuing activities up 30 basis points year-on-year to 27.4%.Experian boasted of growth across all four regions and all four global business lines.Organic revenue growth was 7% in Latin America, 7% in the UK and Ireland, 4% in North America and 2% in EMEA/Asia Pacific.In business lines, Wilson said Decision Analytics was a stand-out performer, as was UK Consumer Services, as the group continued to reap benefits from investments made in earlier years.Cash generation was a particular highlight, with 101% of EBIT converted into operating cash.Analyst Robin Speakman at broker Shore Capital said he expected to leave full year forecasts broadly unchanged despite the warning of headwinds. "As growth turns towards leveraging positive cyclical forces across Experian's markets in data, we concur with management that organic development prospects are set to brighten. We continue to watch the performance of recent acquisitions closely, but believe that the promised leverage will ensue as the current year progresses. "With strong cash generation set to continue across the company, we also expect a significant strengthening of the balance sheet through full year 2015."Shares in Experian were down 5.3% to 1073.50p at 09:30 on Wednesday.OH