Trading Update from TNS

Taylor Nelson Sofres has this week issued a trading update ahead of its preliminary results announcement in mid March. Overall reported turnover is expected to be broadly in line with market expectations.

However, the steady performance seen in most continuous and syndicated services has not been sufficient entirely to outweigh the slowdown in customised activities, experienced by the market information industry as the second half progressed. This has led to organic turnover growth for the year as a whole being relatively flat. Against this background, the group has achieved margin improvement and strong cash generation.

Continuous and syndicated services performed well, with contract renewals coming through in the normal pattern, as clients continued to recognise the value to their business of market tracking and measurement. The one exception has been media intelligence, where the group's progress has been restricted by a lack of recovery in advertising and PR, which are the drivers for market growth in this area. The market for customised information has become progressively more difficult in the second half than had been anticipated at the time of the interim results. The weakening of the US dollar has had a slightly negative effect on reported turnover, which has otherwise benefited from the successful integration of acquisitions made during the year.

The UK will report a decline in underlying activities, due to the ongoing effect of the loss of the BARB contract and further weakness in custom business towards the end of the second half. After a strong first half in France, which was driven both by election activity and the early completion of a number of major contracts, performance slowed and the year as a whole is expected to show limited improvement. The Rest of Europe has improved at a steady rate through the year.

The US custom business has maintained good underlying growth through the year, again outperforming a relatively flat market, at a time when it has also successfully integrated two strategically important acquisitions. With media intelligence seeing some decline, the underlying performance of the region as a whole is expected to be at a similar level to 2001.

The group again achieved strong underlying improvement in the Asia Pacific region, with a good performance from both its consumer panel and customised operations.

TNS has continued to improve operating margin for the year. In line with strategy, there has been an ongoing increase in the proportion of the group's business represented by continuous and syndicated services and it has experienced no unusual pricing pressure on renewal of continuous research contracts. At the same time, the group has continued to improve operational effectiveness and to control its costs. The margin development associated with these factors has been held back by slower than anticipated growth and competitive pressure in both the customised market and the media intelligence sector. Margin improvement, therefore, is likely to be below the targeted 50 basis points for 2002, with further progress expected in 2003.

The timing and speed of any upturn in the market for custom research will be dependent on the rate of economic recovery. In the meantime, the continuous and syndicated market continues to maintain steady growth and the group's new products and services are being well received. Therefore, Taylor Nelson Sofres anticipates achieving further organic turnover growth in 2003.

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

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