Experian Shares Rise as Profit Gains, Dividend IncreasedStephen Morris
Experian Plc, the credit-reporting and anti-fraud firm with data on 45 million British consumers, surged the most since May as it posted an 11 percent increase in first-half profit and boosted its dividend.
Pretax profit climbed to $534 million in the six months to Sept. 30 from $480 million in the year-earlier period, according to a statement today. Operating cash flow rose 17 percent, enabling the Dublin-based company to raise its interim dividend to 12.25 cents a share from 11.50 cents.
“We have had strong performance particularly in North America credit services” and “improving economies in U.K. and Ireland delivered good all-round results,” Chief Executive Officer Brian Cassin said in an interview today. However, “we see near-term organic revenue growth as subdued” in the second half.
Experian’s credit-checking unit in the U.S. is benefiting from the country’s economic recovery, which is pushing up stock markets, helping cut unemployment and bolstering consumer demand for debt. Similarly, the U.K. is the fastest-growing Group of Seven economy and unemployment is at a six-year low. Experian is also targeting growth in regulatory compliance and fraud prevention as lenders increase spending on these areas.
The shares jumped as much as 5.2 percent today, the biggest gain since May 9, and traded 3.7 percent higher at 975 pence at 10:29 a.m. in London.
Revenue in the U.S. increased 5 percent to $1.21 billion driven by 22 percent growth in credit services, amid higher consumer and business lending in the region, according to the statement. Income in the U.K. and Ireland rose about 14 percent to $498 million.
Experian’s net debt to earnings before interest, taxes, depreciation and amortization ratio was 2.17 in the previous 12 months, according to the statement. Cassin said the company’s on track to cuts its debt to within its target of 1.75 to 2 times earnings by the end of the financial year.
“We will update shareholders on our planned use of balance sheet at the full year, but we have already increased interim dividend by 7 percent in the first half,” CEO Cassin said today.
Cassin was promoted from chief financial officer in July after John Peace, chairman of Standard Chartered Plc, stepped down from a same position at Experian. Former CEO Don Robert replaced Peace.