GfK Reports Record 2004

The GfK Group has announced record growth in its preliminary results for the financial year 2004. Sales increased by 12.7% from EUR 595.3 to EUR 671.0m, well ahead of its own forecast. Highlights include 10% plus organic growth for the Retail and Technology division and the Asia & Pacific and Central & Eastern Europe regions.

Earnings before interest and tax (EBIT) including income from participations were up 31% from EUR 69.5 to EUR 91.0 million and the margin is up c2% to an industry-leading 13.6%. The dividend to shareholders rises for the fifth successive year, to EUR 0.30.

The company cites as factors in its success 'a comprehensive and diversified range of cross-border information services, efficient cost management and a global presence which has been consolidated significantly in recent years'.

Organic growth for GfK amounted to 6.4%, and growth from acquisitions 7.2%, with currency effects reducing sales by 0.9%. 61.3% of sales were in the Euro-zone.

All five of the Group's business divisions grew significantly. Consumer Tracking showed organic sales growth of 5.3% with the extension of the German ConsumerScan panel one of the highlights. Healthcare increased sales by a massive 38.2%, 7.8% from organic growth and 33.7% from acquisitions including a 51% stake in V2 GfK in the USA (2003) and 100% of French company m2A. Currency effects reduced growth by 3.2%.

Retail and Technology added 12.2%, mainly through organic growth of >10%, which continued success GfK puts down to factors including a consistent globalization strategy and the gradual adoption of a web-based information system for clients and employees worldwide. Media division organic growth was 7.1%, turning round a 3.8% shrinkage the previous year. Two important contracts contributed: the Belgian radio ratings contract and a BBC TV and radio audience assessment contract.

Custom Research grew by 14.2%, 4.6% of it organic and 10.7% from the takeover of GfK Arbor in the USA, with currency effects reducing the total slightly.

GfK groups companies including GfK Group Services, GfK Data Services and GfK Business Solutions & Processing under a sixth division ('Other'). This will see a drop in sales, expected to be around 31%, due to the lower volume of services that GfK Business Solutions & Processing supplies to Information Resources, Germany.

Results by Division
Growth in %	Total	Organic	Acquisitions	Currency	EUR million 2004
Consumer Tracking	+5.2	+5.3	0.0	-0.2	94.4
HealthCare	+38.2	+7.8	+33.7	-3.2	68.1
Retail and Technology	+12.2	+11.2	+1.7	-0.7	187.0
Media	+6.8	+7.1	0.0	-0.3	62.2
Custom Research	+14.2	+4.6	+10.7	-1.1	252.1
Other	-31.5	-31.0	0.0	-0.5	7.1
Total	+12.7	+6.4	+7.2	-0.9	671.0
1) Figures from the Management Information System, rounding differences may occur

Growth by region Just over a third of all sales are in Germany - regional revenue grew by 6.3%, mostly organic.
In EUR million	2003	2004	Change in %
Germany	221.7	235.6	+6.3
Western and southern Europe	204.7	215.7	5.4
Northern Europe	54.1	55.6	+2.7
Central and Eastern Europe	31.8	40.1	+26.1
America	48.6	84.8	+74.5
Asia and the Pacific	34.3	39.3	+14.3
Total	595.3	671.0	+12.7
1) Figures from the Management Information System, rounding differences may occur

Western and Southern Europe enjoyed good organic growth while Northern Europe grew slower and the UK business of HealthCare and Custom Research performed below expectations.

Sales growth was in double figures in both Central & Eastern Europe and Asia & The Pacific, mainly based on organic growth, with currency effects lowering the total. A huge increase of 74.5% in US sales reflects the takeover of GfK Arbor with effect from 1 January 2004 and the acquisition of a majority holding in V2 GfK on 1 July 2003. America now accounts for almost 13% of sales and is GfK's third biggest region in terms of sales. From zero presence in September 1999, at the time of GfK's IPO, the Group's US companies now rank No. 15 among the country's MR providers.

Employment rose by 9.3% to 5,539 full-time employees at the end of financial year 2004. This is down to growth outside Germany, whose share of total employment is down to 27.1% from 28.8%.

Members of the Management Board are currently sharing the day-to-day responsibilities of its member Heinrich A. Litzenroth, who was on holiday in Khao Lak when the tsunami struck Southern Asia on 26 December 2004 and has been missing since.

GfK is forecasting sales of EUR 710 million for the current financial year, equivalent to around 6% at constant scope of consolidation. Its target for income growth is much steeper at almost 17%. 2005 has started well with existing orders, incoming orders and sales invoiced at the end of January already at 36% of the forecast sales for the year.

Web site 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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