GfK: Trend in margin reflects initial success of transformation

gfk•    Transformation of the Group well underway
•    Sales increase in high-margin business and margin improvement achieved in ad-hoc research
•    Total sales in organic terms down by 2.1 percent on previous year to €1,451 million
•    Adjusted operating income of approximately €179 million (previous year: €190.4 million, excluding one-off pension effect: €180.3 million)
•    Margin of 12.3 percent (previous year: 12.7 percent; excluding one-off effect: 12.0 percent)

Nuremberg, 30 January 2015 – The GfK Group’s comprehensive transformation is showing first successes. On a comparable basis, the margin rose by 0.3 percentage points on the previous year to 12.3 percent, despite a sales decrease. In the past year, the Group continued to consistently realign its portfolio in the Consumer Experiences sector, launched a number of global products in the market and invested heavily in future growth. In line with its strategy, GfK achieved higher sales in the high-margin Consumer Choices sector and a higher margin in the Consumer Experiences sector.

Matthias Hartmann, CEO of GfK SE, explained: “Our consistent transformation is taking hold and the trend in the margin reflects that we are well underway. GfK is in a strong position to embrace the rapid change happening in our industry. We are building on our global portfolio, which we are making increasingly scalable, our optimized structure and our future-oriented business model.”

GfK’s business is in a phase of realignment that primarily involves the Consumer Experiences sector. The focus is on achieving an increase in income and the margin. At the same time, the highly profitable Consumer Choices sector continues to pursue a growth strategy. Here, GfK is investing heavily in new services and orders – accepting that this may affect results in the short term – which will start to generate sales and income from this year onwards. In 2014, GfK’s business developed in line with this strategy.

Based on the preliminary figures, sales at the GfK Group in financial year 2014, the third year of the Group’s comprehensive transformation, decreased by 2.9 percent to approximately €1,451 million (previous year: €1,494.8 million). In organic terms, sales were down by 2.1 percent.

Currency effects, which impacted heavily in the first six months of the year, accounted for a sales reduction of 0.9 percent

The Group’s adjusted operating income decreased by 5.9 percent compared with the previous year to approximately €179 million. Adjusted for the pension effect following the switching of a pension plan in 2013, adjusted operating income for 2014 was at the previous year’s level (previous year: €180.3 million without pension effect).

Following the margin of 12.7 percent in 2013, the 2014 margin was 12.3 percent. However, net of the pension effect, the margin exceeded the previous year’s figure of 12.0 percent. This increase of 0.3 percentage points was achieved despite lower sales.

Good sales growth in high-margin Consumer Choices sector and higher profitability of ad-hoc research in Consumer Experiences sector

The Consumer Choices sector achieved a sales increase of 2.7 percent before currency effects and acquisitions. In view of scheduled write-downs, the set-up of new panels, the ongoing development of technological platforms and the start-up of new business, the margin decreased. It amounted to 22.2 percent after 23.8 percent in the previous year. In Brazil and the Kingdom of Saudi Arabia, panels were set up as planned for the media research contracts. These business activities are set to contribute to growth in the Consumer Choices sector from the second half of the year onwards.

In the Consumer Experiences sector, a rise in the margin from 6.6 percent to 7.0 percent was achieved on the back of the transformation, despite a sales decrease of 6.2 percent to around €827 million. Today, approximately 40 percent of sales in this sector are generated with global products, which form a core element of the sector’s strategy.
Sales in the Other business unit amounted to approximately €3 million during the reporting period (previous year: €5.7 million).

Regional sales trends

The growth regions of Asia and the Pacific, Latin America and Central Eastern Europe/META once again recorded a strong trend in business. However, the good level of organic growth in these three regions was partly offset by substantial negative currency effects, with only Asia and the Pacific and, to a lesser extent, Central Eastern Europe/META recording overall growth. In Northern Europe, the sales decline of 7.0 percent in organic terms was most significant. Almost half of this reduction resulted from the non-renewal of a major order that did not constitute core business. In the region of Southern and Western Europe that continues to be affected by crises, a sales decrease of 3.4 percent was recorded. The region North America reported a minor sales decrease of 1.1 percent.

About GfK

GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK’s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers’ experiences and choices.
For more information, please visit www.gfk.com or follow GfK on Twitter: https://twitter.com/GfK_en