Daily Research News Online no. 3333 - VNU First Half Results

VNU First Half Results

August 13 2004

VNU, parent of ACNielsen, has reported results for the first half of 2004. Reported revenues are down 5% versus the first half of 2003 but revenues at constant currency are up 2%, while cash earnings show a healthy increase. The Marketing Information and Media Measurement & Information groups show strong organic revenue growth of 8 and 7% respectively.

Reported cash earnings and reported cash earnings per share both rose significantly, but would have shown even stronger gains at constant currencies. A summary of financial information, for interest only, is given below along with performance summaries for the divisions split by region and business unit: more detailed financial information, including cautions and definitions for investors, is available at www.vnu.com and should be consulted for any othr purposes.

VNU Topline Results

Amounts x EUR 1 million	First half 2004	First half 2003	change %
			reported	at constant currencies*
Cash earnings – earnings **	215	201	7%	17%
Cash earnings per share – earnings per share ** (x EUR 1)	0.84	0.80	5%	15%
Total revenues	1,834	1,939	-/-5%	2%
Operating income **	317	329	-/-4%	4%
Net earnings	91	103	-/-12%	0%
Net earnings per share (x EUR 1)	0.35	0.40	-/-12%	0%
Operating income as a percentage of total revenues	17.3%	17.0%	30 basis points

** before goodwill amortization and impairment charges

Rob van den Bergh, Chairman and CEO of VNU, declares himself 'very excited about the strong top-line growth we achieved in our marketing and media information segments - a clear indication that our information and services are in great demand'.

ACNielsen delivered good growth in each of its regions, adding clients and increasing market share, although van den Bergh says that 'margins are under pressure in Europe as we convert clients to our new data factory there'.

The Advisory Services units, which provide high-value insights and help clients improve ROI, saw double-digit revenue growth. Nielsen Media Research grew its US revenues by 11%. Van den Bergh says that 'Nielsen remains on track to expand its coverage of the US television marketplace by increasing the size of its national TV ratings sample and rolling out its Local People Meter service, despite the public debate'.

In Business Information, trade magazines still report weak advertising demand, but trade shows have buoyed the division with impressive growth in the US and Europe. The planned divestiture of the World Directories business remains on track - van den Bergh says 'We expect to conclude a sale before the end of the year'.

VNU invested EUR 46 million for acquisitions in the first half of 2004, mainly relating to RedSheriff (indirectly 58%), Music Control (51%) and AMER Research ltd (50%). It also divested some smaller operational units, including Marketing Resources Plus (100%) and InfoAdex Spain (50%).

Net debt at the end of June 2004 (EUR 2,991 million) remained at approximately the same level as at year-end 2003, the result of further repayment of debt and the impact of a higher US dollar rate at this balance sheet date.

Performance by Group

Marketing Information

Amounts x EUR 1 million	first half 2004	first half 2003	% change
			reported	organic
Total revenues*	878	851	3%	8%
Operating income*	85	77	10%	12%

* Excluding Claritas Europe

In the first half of 2004, the Marketing Information group achieved strong 8% organic revenue growth, as virtually all regions and business units reported increases, with particularly strong first half growth in the Americas and Emerging Markets regions.

The 2003 operating income figure was negatively influenced by a one-time write-off. The group's operating margin in the first half of 2004 was 9.7% compared with 8.9% in 2003.

The Americas region delivered strong organic revenue growth, with solid performances from ACNielsen Latin America, BASES and Claritas. In the US, ACNielsen reports excellent progress on its Mega Panel project, which will double the size of the US Homescan consumer panel from 61,500 to 125,000 households by 2005.

ACNielsen's Europe, Emerging Markets and Asia Pacific regions also showed good organic growth, while retail measurement services were expanded in Russia, China, India and Japan.

Media Measurement & Information

Amounts x EUR 1 million	first half 2004	first half 2003	% change
			reported	organic
Total revenues*	457	464	-/-2%	7%
Operating income*	102	97	5%	6%

In the first half of 2004, the Media Measurement & Information group delivered organic revenue growth of 7%. This was largely driven by 11% growth for Nielsen Media Research in the United States, which saw continued strong demand for its TV ratings and related services. Meanwhile Nielsen Media Research International (NMRI) saw organic revenues up 9%, due to stronger demand for global advertising information, as well as the introduction of a new product offering in Germany.

VNU's 65%-owned Internet measurement business, NetRatings, grew its revenues at a double-digit rate, reflecting increased demand and improved business conditions.

The Nielsen Entertainment division, especially the Nielsen EDI and Nielsen NRG units, continued to be impacted by competition, and overall by lower information spending in the motion-picture and music industries.

The group's operating margin in the first half of 2004 amounted to 22.3% compared with 20.9% in the first half of 2003. For 2004 in total, organic revenue growth for the Media Measurement & Information group is expected to be between 7% and 8%. The group's operating margin for 2004 as a whole is expected to be at least the same as in the first half 2004 (compared with 21.2% in 2003).

Business Information

Business Information's advertising revenues in the US decreased by 8% (especially in the Food & Beverage and Music magazine groups), and in Europe by 5%. Trade shows, almost all of which are in the US, continued their growth with new shows launched and further margin improvement.

Trade shows comprised approximately 34% of the group's total revenues and 86% of the group's operating income. For the second half, VNU expects the decline in advertising revenues in the United States and Europe to bottom out.

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