VNU Forecasts Good Despite European Delays

VNU has issued a trading update indicating that 2004 case earnings per share (CEPS) should be at the top end of its 7-9% forecast (constant currencies), due to 'positive developments during the second half year'. The upturn comes despite delays in moving data production systems to a new European 'data factory'.

The result also incorporates the negative effects of both the Directories group divestiture (c.EUR 8 million) and the partial relocation of the Haarlem headquarters to New York (also c.EUR 8 million), which were not part of the guidance issued in August.

Organic revenue growth in Marketing Information (c.6%) and Media Measurement & Information (7%+) has been above market average. Both groups expect to deliver on 2004 margin guidance (c.12% for MI and almost 23% for MMI).

Chairman and CEO Rob van den Bergh describes 2004 as 'a very solid year' and says that following the successful sale of the Directories business VNU 'will become a more focused and faster-growing company'.

In the MI group (Marketing Information), ACNielsen is delivering 'strong organic growth in four of its five operating regions'. Europe is the exception due to unforeseen complexities in the transition to a new data factory, plus a 'difficult business climate' for ACNielsen.

The new schedule for the data factory 'allows more time for the organization and its clients to fully realize all capabilities of the new factory including cross geographic reporting, more rapid delivery of key market data and the ability to select preformatted views of their information ('I-Sights') delivered over the web'. With a longer rollout, ACNielsen anticipates incurring additional transition and operating costs amounting to approximately EUR 20 million per year, well into 2007, as it continues to run its current data production systems while converting clients to the new platform: these additional costs will prevent the MI group from meeting its 15% margin target for 2006.

Elsewhere in the MI group, the Advisory Services business is making good progress and BASES is doing particularly well, continuing to expand its new-product forecasting services around the world. Two other key initiatives aimed at driving future margin growth in the group, the MegaPanel expansion in the US and Project Atlas in North America, are said to be on track.

In the MMI group (Media Measurement & Information), revenue and margins are expected to increase with continued growth for Nielsen Media Research (NMR) and better results for NetRatings, in which VNU has a 63% interest. In the US, NMR should see approximately 11% organic revenue growth with its Local People Meter (LPM) being introduced in the nation's top television markets and supported, despite earlier controversy, by 'virtually all of Nielsen's clients'.

Organic revenue growth is expected to be at least 7%, while the group's margin will be nearly 23%, which is at the high end of the guidance in the 2004 half yearly report.

As a result of the proceeds of the divestiture of the Directories group, VNU's net debt is expected to be approximately EUR 700 million at year-end 2004 versus almost EUR 3.0 billion at year-end 2003. More details of the buy-back program for some of the group's outstanding debt instruments should be available during January 2005.

Capital expenditures for 2004 are expected to be approximately EUR 200 million, and VNU expects an impairment charge in 2004 of approximately EUR 40 million, mainly due to lower than previously expected advertising revenues in some of its trade magazines in the Business Information group.

The full statement can be found on the group's web site at www.vnu.com

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

• VNU
• All news