Organic Growth Boosts Bigger GfK

GfK's first half sales rose 54.6% to Euros 534.4m and adjusted operating income was up 76.3% to Euros 63.8m. Organic sales growth was a healthy 6.2%, ahead of the industry as a whole. The company has also extended the contract of its CEO Professor Dr. Klaus L. Wübbenhorst to 2012, ahead of schedule.

Growth from acquisitions amounted to 47.6%, mostly from the consolidation of the former NOP World companies, whose business performance was not yet included in the first six months of 2005. GfK says the integration of NOP World and of its US business activities is proceeding smoothly and that the sought-after synergy effects on income are already visible.

Operating margin rose from 8.5% in the first quarter to 11.9% for the half year, also well up on last year's first-half margin of 10.5%.

Improved profit and margin are attributed to 'very good business performance in all five business divisions' as well as good progress with integration and 'considerable progress in eliminating the operating problems of 2005 such as the restructuring of GfK Martin Hamblin and the retail panel in Switzerland.'

The Honomichl 2006 Global TOP 25 lists GfK as the fourth largest MR organization in the world after VNU, Taylor Nelson Sofres and IMS Health.


Results by Division

Sales of the Custom Research division grew 92.5% (organic growth 7.9%) to Euros 249.5m. Total income over the same period was up 136.5% to Euros 20.1m.

Sales in the Retail And Technology division grew 10.6% (8.0% organic) to Euros 109.2m, and income rose 8.5% to Euros 25.0m. The Consumer Tracking division saw revenues up 9.4% (almost entirely organic) to Euros 52.3m, and total income up 160.3% to 2.6m euros.

The Media division's sales showed organic growth of 4.8% but including acquisitions they rose 81.1% to Euros 57.0m in the first half of the year. Organic growth in sales amounted to 4.8%. Total income quadrupled to Euros 12.5m.

The Healthcare division grew revenues by 86.2% to Euros 63.7m. Organic sales fell by 4.4% in the half year but were rising in the second quarter. Total income rose 42.3% to Euros 5.6m.


By Region

The firm's six core regions fared very differently in the six-month period. Organic growth in Germany was 6.2% - sales totalled Euros 128.8m. As a proportion of all sales, the firm's home country dropped from 35.1% to 24.1% with the NOP World acquisition. In Western And Southern Europe, sales were up by a total of 30.6%(10.1% organic) to Euros 143.4m. Central And Eastern Europe saw rapid organic growth of more than 25% contributing to an overall rise to Euros 29.2m.

However, in other regions organic sales growth was slow or there was a decline: in Northern Europe, sales virtually tripled to Euros 78.7m but in organic terms sales were down by 13.2%, with the 2005 restructuring of GfK Martin Hamblin blamed. Sales in America almost tripled to Euros 134.6m but acquisitions accounted for practically all the rise, with organic growth only 0.8% following a poor first quarter. In the Asia And The Pacific region, sales crept up 1.7% to Euros 19.7m, with only 0.3% attributable to organic growth.


Outlook

The group has confirmed its forecast, expecting sales of at least Euros 1.1 billion for the full year, a year-on-year rise of more than 18%, with total income continuing to rise faster than sales. GfK's home page is at www.gfk.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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