Experian eyes more cost cuts to beat credit crunch

Credit information firm Experian came in just ahead of forecasts with a 15 per cent rise in full-year operating profit and announced plans to cut more costs to offset continued turbulence in financial markets.

Experian, best known for running credit checks for banks and other lenders, has seen its shares drop almost 40 per cent in the past year, as analysts predict a slowing of UK and US business while banks cut back on loans and credit cards.

The group warned yesterday that conditions remained challenging, with revenue seen "flat to slightly down" in the first quarter, but said it remained confident in its outlook, reassuring investors with news of more cost cuts.

"While it is still too early to call a turn in the US and the UK financial services markets, and US Credit Services continues to soften, we have taken the necessary steps to reduce costs and protect margins," chief executive Don Robert said.

Experian had announced plans for annualised savings of $80 million in January and the group raised that to $110 million yesterday, with $50 million to be cut in the year to March next year. One-off restructuring costs will total $140 million, it said.

The news helped lift Experian shares almost five per cent in early trade.

Experian's headline earnings, total earnings before interest and tax (EBIT), came in at $945 million - above a median forecast of $938.7 million according to Reuters Estimates, but in line with its own forecast of $935 million to $965 million.

EBIT for continuing activities - which excludes businesses sold, closed or identified for closure - and excluding the effects of exchange rate changes, rose 13 perc ent.

Experian, whose margins have been closely watched by investors as revenue growth slows, said its operating profit margin was 21.8 per cent, broadly in line with the previous year.