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VNU's results for 2003 show a 9% increase in its underlying cash earnings per share (CEPS) at constant currencies - a steep decline in actual earnings reflects the weak US dollar. Both the Marketing Information and Media Measurement & Information groups are strong performers.
The company's net earnings per share declined 25% and cash earnings per share (CEPS) declined 17%, with the dollar the main culprit, although the results note the adverse effects of reorganization charges and a book loss on the Claritas Europe divestiture. Please note that the following article includes a summary of results only and the full report at www.vnu.com/vnu/news.jsp?id=127 should be consulted for details, definitions and clarifications.
| Amounts x EUR 1 million | 2003 | 2002 | % change | |
| reported | organic | |||
| Total revenues | 1,765 | 1,881 | -/- 6% | + 6% |
| Operating income | 193 | 258 | -/- 25% | + 2%* |
| * Excluding a EUR 33 million reorganization charge. | ||||
Operating income fell by EUR 65m, due to the impact of the weak US dollar, a reorganization charge for the restructuring exercise known as Project Atlas, and investments in future growth including product development costs and start-up expenses for new clients. Excluding the reorganization charge, the group's operating margin amounted to 13%, in line with the company's 2003 trading update guidance (excluding Claritas Europe). It is expected to be around 12% in 2004, but to rise in subsequent years.
The company took a one-time reorganization charge of EUR 33m for Project Atlas, mainly covering severance costs. Over a three-year period, Marketing Information will reduce its work force by more than 700 full-time employees, part of which will come from natural attrition.
Investments in new initiatives include a plan to more than double the size of the US Homescan consumer panel, from 61,500 to approximately 125,000 households by the end of 2005.
During 2003, Marketing Information achieved revenue growth at constant currencies in all regions in which it operates. This performance was led by Retail Measurement services, which grew 7%. Consumer Panel and Customized Research services showed slower growth, while Modeling & Analytics (M&A) services grew as a result of strong performance in ACNielsen.
In the Americas, the Marketing Information group realized a revenue increase at constant currencies of 7%, resulting in considerable growth in operating income, driven by strong performances across the region.
In Europe, Middle East and Africa, operating results improved. Revenue at constant currencies increased 6%, mainly due to major client wins for ACNielsen Europe, including United Biscuits and Cadbury in the United Kingdom and Unilever in Germany. 2003 saw the completion of ACNielsen Europe's major restructuring program, Operation Leading Edge, yielding efficiencies which made a significant contribution to overall operating results.
ACNielsen Asia Pacific achieved modest revenue growth at constant currencies but operating income at constant currencies declined slightly, as strong growth in Asia was offset by intensifying competition, primarily in Japan and the Pacific.
| Amounts x EUR 1 million | 2003 | 2002 | % change | |
| reported | organic | |||
| Total revenues | 929 | 1,032 | -/- 10% | + 5% |
| Operating income | 197 | 188 | + 5% | + 25% |
Organic growth in total revenues was approximately 5% in 2003, largely driven by the performance of Nielsen Media Research in the United States. The group's operating margin rose to more than 21% from 18% in 2002.
In the US, Nielsen Media Research raised revenues by more than 9% (at constant currencies), due to continued strong demand for its television audience measurement and related services. In February 2003, Nielsen announced plans for the largest-ever expansion of its National People Meter sample, from the current 5,000 households to nearly 10,000 homes by 2006; and plans to introduce a Local People Meter (LPM) service in the top 10 local TV markets in the United States.
Revenues at constant currencies for Nielsen Media Research International (NMRI) were flat and operating income declined slightly reflecting the global advertising environment. Increased revenues from the Nielsen Monitor-Plus advertising information services business in the US, under NMRI management, were offset by lower revenues in Europe, reflecting the impact from client budget pressures, a weak economy and continued consolidation on the agency side. NMRI announced a major expansion of its TV ratings service in China, with plans to go from 11 cities to more than 100 local and provincial markets within two years. By year-end, NMRI had 25 of the new markets up and running.
Results improved significantly at VNU's 65%-owned Internet measurement business, NetRatings. Organic revenues grew at a double-digit rate, due to improved renewal rates and selling prices across its clients base and growth from its various product and service offerings.
Total revenues and operating income in the Nielsen Entertainment division both decreased, on a constant currency basis, mainly due to increased competition and pricing pressures. Nielsen EDI, which measures box-office results and provides related information services, saw its total revenues and operating income at constant currencies decline as a result of competitive pressures.
The Media Solutions division showed moderate revenue growth, led by strong results from the television, radio and advertising segments at Scarborough Research, which boosted operating income growth for the overall division, as did operating cost efficiencies in all business units.
Considerably more detail is available at www.vnu.com/vnu/news.jsp?id=127
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
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