Credit checking company defies the gloom

Credit checking company defies the gloom

Credit checking company Experian cheered the stock market this morning with news of a stronger-than-expected second half despite a slowdown among key financial services clients in the UK and US.

The company's shares were up almost 8%, or 28p, to 384p in morning trading, after it said second-half revenues grew 2% and reiterated a confident outlook despite pressures from the ongoing turmoil in global markets. It stuck to its forecast for double-digit earnings growth for the full year.

The company, which obtains a large chunk of its business from retailers and banks who need credit background checks on borrowers, indicated that strong growth in Asia and Latin America helped offset tough times elsewhere.

"Experian's strong portfolio of businesses enabled the group to deliver a good second-half performance, despite continuing marketplace challenges in the US and the UK," said chief executive Don Robert.

Advertisement starts

---

---

Advertisement ends

"Looking ahead, we expect good performances in new geographies and across many business lines. Although we do not plan on short-term improvement in the US and UK financial services environment, and are facing strong comparables in the first quarter, our cost efficiency programme is on track and we remain confident about the outlook."

Robert last year cemented fears of an economic slowdown when he said he viewed the economic climate as the worst for 20 years. A few months later Experian indicated it would be laying off hundreds of staff as it comes to terms with a slump in spending by US and UK banks.

The group said at the time its credit services division had seen business with banks fall on factors such as fewer customers applying for mortgages and therefore less demand for credit-checking services. Today, the company said market conditions in US financial services continued to be "challenging", including in the mortgage sector, which has been rocked by the fallout from risky sub-prime loans turning bad.

In the UK and Ireland, revenues were up 1% in the second half but here again Experian flagged up an uncertain financial services market.

Analysts at Citigroup said sounded a cautious note about Experian's prospects.

"Experian is close to the bottom of its chart and the fourth quarter's growth stability suggests it won't break through on the downside in the very short term," they said in a research note.

"We nevertheless remain nervous about the 2009 outlook and feel earnings risk remains on the downside. Overall, it still feels too early to call a bottom."

guardian.co.uk © Guardian Newspapers Limited 2008