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Experian on Thursday said it did not expect any short-term recovery in the US and UK financial services market as it reported a small increase in underlying revenues.

Total revenues in the three months to the end of June, including acquisitions, increased by 21 per cent, but organic revenue growth was 1 per cent.

The credit checking group had previously warned that the quarter to June, the first of its financial year, would see flat or slightly lower revenues, excluding acquisitions, because it compared with a strong period last year, when organic growth was 7 per cent.

However, its performance – which was slightly better than expected – led the shares to rise 3.7 per cent in early trading, gaining 13¼p to 374½p.

Don Robert, chief executive, said he expected profits to grow this year as result of growth in other regions of the world and plans, announced earlier this year, to reduced costs by $110m.
Paul Brooks, finance director, said the performance was resilient. He expected the cost cuts to mean the group could at least maintain margins in the current year.

In May Experian said it cut 800 to 900 jobs and some work was being moved to lower-cost countries. Mr Brooks said as acquisitions became harder to find, Experian planned to expand through investment in new territories, such as Japan, India, Canada and Latin America.
He promised an update in the next few months on a strategic reviews of two businesses that analysts think could be sold – PriceGrabber, a US price comparison website and a French transaction processing company.

Acquisitions last year totalled $1.7bn and included purchases such as Serasa, a financial services business based in Brazil, and Hitwise, an international internet marketing intelligence business.
Two-fifths of Experian’s business comes from US and UK financial services companies, which use its credit checking systems when deciding whether to lend to customers. In the quarter, the US credit services division suffered a 5 per cent fall in revenues while that business in the UK declined by 2 per cent.

Mr Brooks said that while loan origination was weak, customers were using Experian’s services to manage their risks and reduce losses, such as through improving their collection activities, and to sell more products to existing customers.

Revenues from North America rose 1 per cent, but would have been flat without the inclusion of Hitwise. In the same quarter last year, the US business was beginning to suffer the slowdown in the sub-prime mortgage market, with revenues at its LowerMyBills subsidiary down sharply.
The group said “conditions in mortgage and pre-screen continued to be weak”. But, Mr Brooks said, counter-cyclical activities were seeing improvements. Its consumer direct business, which allows people to check their credit rating, was doing well.

In the UK and Ireland revenues rose 7 per cent, but were up 1 per cent excluding acquisitions. Sales in Latin America totalled $128m, compared to $3m in the same period of last year. In the rest of the world, revenues rose 26 per cent in total, but by 1 per cent on an underlying basis.
As the group reports in dollars, revenue growth was flattered on translation, and at constant exchange rates the increase would have been 16 per cent.
Maggie Urry