Tuesday, August 14, 2012

GfK with strong business trend in difficult market conditions

14 August 2012

Nuremberg, 14 August 2012 – The GfK Group recorded a sharp rise in sales in the first half of 2012 and is therefore on track to achieve the long-term goals of the new strategy – Own the Future. Sales increased by 9.1 percent in the first half of the year to €720.1 million.
Implementation of the new Own the Future corporate strategy is on schedule. A new organizational structure with global and regional responsibilities has been created to support shared utilization of existing data and resources as well as the transfer of expertise on various sectors, client groups and regions among GfK experts. The second quarter too saw examples of the success of this new cross-sectoral cooperation. Based on the new One GfK platform, a two-year exclusive contract for surveying brand perception and advertising effectiveness on behalf of a global leader in the consumer goods segment was won for instance, as were worldwide surveys on sales optimization for a big car manufacturer in the period from 2012 to 2014.
In the first six months of 2012, the Consumer Choices sector again achieved considerable sales growth of 7.3 percent to €277.2 million, of which 4.2 percentage points represented organic growth. Currency effects boosting growth by a further 3.2 percentage points.
The Consumer Experiences sector recorded an increase in sales of 10.2 percent to €440.0 million. With a contribution of 7.6 percentage points, acquisitions accounted for the major share of growth, while currency effects added another 2.5 percentage points. In organic terms, sales remained constant in this sector.
The distinctly difficult economic environment led to a marked cooling of business development in the second quarter. The GfK companies in the strategically important Asia and the Pacific region as well as Latin America recorded the sharpest growth. In the Asia and the Pacific region, overall sales increased by 31.2 percent to €71.4 million. At 14.4 percentage points, organic growth in the first half of 2012 exceeded the figure for the comparable period in the previous year. Significant organic growth of 10.2 percent was also recorded in Latin America, where sales of €29.6 million were achieved.
"Despite the growing economic challenges, we are confirming our forecast for the year and in the coming months we will focus on achieving our goals," comments Matthias Hartmann, CEO of GfK SE.
Key figures
In the first half of 2012, the GfK Group achieved sales totaling €720.1 million. Compared with the same period in the previous year, this represents an increase of 9.1 percent. Of this, acquisitions contributed 4.6 percentage points and currency effects also impacted positively with 2.8 percentage points. Organic growth amounted to 1.7 percent.
Adjusted operating income totaled €81.4 million in the first six months of 2012, which represented a decrease of 3.1 percent on the income generated in the first six months of the previous year.
The GfK Group's margin was 11.3 percent in the first half of 2012 after 12.7 percent in the same period of the previous year. The trend in the margin during the first half of 2012 was partly caused by transformation costs. The cost of sales includes approximately €2.8 million in development costs for expanding the StarTrack platform and other evaluation software, the NIS project and a CRM project. Selling and general administrative expenses comprise consulting fees in connection with the new ERP system, GfK’s new website and modifications to the systems landscape in line with the new organization amounting to €0.7 million

GfK Group: key figures1)
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We expect that 2012 will be a difficult year for some clients, with the volume of specific contracts being reduced this year, or their implementation postponed. To counter this, new business acquisition in other client segments and growth in new business fields will be stepped up to offset these effects.
GfK’s Management Board is nonetheless confident that, based on its new structure and strategy, the GfK Group will once again outperform the market research sector this year and be in a position to gain additional market shares.
GfK is assuming that there will be no further deterioration of the global economic climate in 2012 and that exchange rates will remain approximately at the current level until the end of this year. Under these conditions, the company continues to anticipate a sales volume of some €1.5 billion for 2012. This would equate to growth of around 9 percent compared with the previous year. In spite of the considerable expenses and investment in business development, the company will endeavor to achieve a further increase in income and to virtually match the 2011 profit margin (adjusted operating income in relation to sales).
As part of the new strategy, the GfK Group has also set challenging targets to be achieved in the medium term: by year-end 2015, sales totaling €2.0 billion and a profit margin of 16 percent are to be achieved. The Consumer Experiences sector and the Consumer Choices sector, which continues to expand at a faster rate, will both contribute to this sales growth. Strong emphasis will be placed on increasing sales and market share in the BRIC countries.
About GfK
GfK is one of the world’s largest research companies, with more than 11,500 experts working to discover new insights into the way people live, think and shop, in over 100 markets, every day. GfK is constantly innovating and using the latest technologies and the most intelligent methodologies to give its clients the clearest understanding of the most important people in the world: their customers. In 2011, GfK’s sales amounted to €1.37billion.
Since 1 January 2012, GfK has been focusing on the two complementary sectors of Consumer Choices and Consumer Experiences.
The Consumer Choices sector investigates what’s selling when and where. It focuses on the continuous assessment of market segments and trends by analyzing all major sales and information channels and media. The former Retail and Technology sector and the Media sector’s TV, radio and print measurement businesses have been folded into the new Consumer Choices sector.
The Consumer Experiences sector concentrates on consumers’ attitudes, perceptions and behavior and answers the questions who is buying, why they are buying and how they are buying. These are explored though highly creative, robust and flexible methodologies. GfK is pioneering sophisticated new ways of understanding how people experience brands and services. The former Custom Research business and ad hoc research from the Media sector are included in this new sector.

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