- Shares fall to lowest since March on cautious outlook
- Modest margin accretion expected
- Second interim dividend up 6%
Global data services specialist Experian (EXPN) was one of the biggest losers in the FTSE 100 on Wednesday, falling 5% to £26.18 after reporting lower than expected full year organic revenue growth and cautious 2024 guidance.
The shares have lost nearly 20% since February on consumer credit worries amidst a cost-of-living crisis and the collapse of Silicon Valley Bank in the US in March.
WHAT DID THE COMPANY SAY?
Chief executive Brian Cassin commented: ‘We delivered very strong results in FY23, reflecting a combination of new business wins, new products, and expansion into higher growth markets.
‘We saw growth in every region, in many cases outperforming our underlying markets substantially.’
The company delivered organic revenue growth in constant currencies of 7% which was at the lower end of its previous 7% to 9% guidance. Including acquisitions, revenues increased 8% to $6.58 billion.
Shore Capital analyst Robin Speakman had expected organic growth of 7.7%, although he maintains the outturn was still ‘pleasing’.
Underlying earnings before interest increased 9% to $1.8 billion as margins expanded at the ‘top end’ of the company’s expectations.
CAUTIOUS GUIDANCE
Looking forward, the company flagged another year of growth due to the breadth and resilience of its portfolio and ‘significant structural growth opportunities’. However, the guidance of organic growth in the 4% to 6% range disappointed the market.
Speakman said: ‘A more cautious outlook then at this stage, but still good growth in the context of Experian’s performance over the past few years through the pandemic in achieving constant compounding growth.’
The analyst said he expected to ‘shave’ his 2024 forecasts but noted foreign exchange effects may add a tailwind this year.
‘High sustained margins drive strong cash generation and strategic flexibility in delivering shareholder value. The balance sheet is now visibly strengthening, we note current Debt/EBITDA at c.1.8x.’
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