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Experian posts stronger profit but inflation hits growth outlook
Global Banking & Finance Review®
Company
By Sinchita Mitra
(Reuters) – Experian posted a 34% jump in full-year pre-tax profit on Wednesday, but the world’s largest credit data firm gave a softer organic revenue growth outlook as demand for lending data is likely to fall as rising inflation hits consumer spending.
The Dublin-based firm projected organic revenue growth of 7%-9% for the year ending March 2023. Weaker demand for its mortgage credit data due to lower consumer re-financing activity knocked 150 basis points off the growth forecast, Experian said.
While overall demand for credit reports and scores is rising as the global economy emerges from the pandemic, consumer spending across Experian’s main markets — North America and the UK — has slowed due to a relentless rise in prices of everything from fuel to food, reducing demand for credit data.
“While we are closely monitoring the global macroeconomic trends, we are confident in our strong track record,” Experian CEO Brian Cassin said in a statement.
Experian shares were down 3.4% to 2,579 pence at 1054 GMT, making it the weakest performance on the FTSE 100 index.
“Some may argue that the forward guidance from the company is a little lower than some analysts might have been hoping for,” Steve Clayton, a fund manager at Hargreaves Lansdown with Experian shares in his portfolio, said.
“This is more about the macro frame the company are operating in. Everyone can see that the outlook is getting weaker, with inflation gnawing away at consumers spending power.”
For the year ended March 31, Experian reported a 34% rise to $1.48 billion in its annual pre-tax profit.
Experian’s adjusted operating profit grew 19% to $1.65 billion, just shy of analysts’ average estimate of $1.67 billion, according to the company.
Its consumer business, which provides individual customers with their credit information and helps them raise complaints on credit reports, reported a 22% jump in organic revenue.
(Reporting by Sinchita Mitra in Bengaluru; Editing by Subhranshu Sahu, Sachin Ravikumar & Simon Cameron-Moore)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
Organic revenue growth refers to the increase in a company's sales generated from its existing operations, excluding any revenue from acquisitions or mergers.
A credit report is a detailed account of an individual's credit history, including credit accounts, payment history, and outstanding debts. It is used by lenders to assess creditworthiness.
Consumer spending is the total amount of money spent by households on goods and services. It is a key driver of economic activity and reflects consumer confidence.
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