Mixed Fortunes for Observer and Opinion Research Corp

US-based Opinion Research Corporation and Sweden's Observer Group have announced financial results for the first quarter of 2005. ORC's rising revenues from social research offset a slight decline in market research and a bigger fall in teleservices, while Observer reports continued positive development in the US but a weak quarter in Europe.

ORC's total revenues for the quarter were $48.9m versus $48.0m a year before. in the prior year's first quarter. Social research revenues rose more than 9% to $33.9m, but market research revenues fell 3% to $13.0m. Teleservices revenues were down from $3.6m to $2.1m.

Net income for the quarter was $142,000, versus $938,000 last year, impacted by $776,000 for previously announced refinancing charges.

Chairman and CEO John F Short believes that 'the outlook for our market research business continues to improve, based on increased new business bookings and backlog, and we expect continued good performance from our social research business, our largest segment. In the quarter, we experienced disappointing results in our teleservices segment which we expect will improve during the course of the year'. The company expects revenues in 2005 to be between $200 and $205m, net income to be between $4.2 and $4.7m and diluted earnings per share to be between $0.62 and $0.70. It is online at www.opinionresearch.com

Observer Group's operating revenue was up c.3% to SEK 423.5m from SEK 410.5m, but exchange rate effects from the translation to Swedish kronor affected revenue negatively by SEK 9.4m compared with 2004, leaving organic growth in local currency at zero. From January 1, 2005 Observer's accounting principles follow IFRS standards, with all comparative periods translated accordingly.

Operating profit, EBIT, amounted to SEK 50.8m, down from 59.7m, and operating margin was 12.0%, down from 14.5%. Earnings per share amounted to SEK 0.44, down from 0.53, and net profit was SEK 30.8m, down from 36.9m in 2004.

CEO Robert Lundberg says market conditions in the Nordic region are gradually improving although competition is tough. 'In Germany, we are winning over new clients but during the first quarter this did not offset the effect of cost cuts by major clients, mainly in the automotive industry. Our integrated services are also being well-received in the UK and we expect increased order bookings to gradually compensate for the effects of weak news flows during the first quarter'.

By contrast, the US position is strong, and likely to improve further with the integration of Delahaye. Lundberg says Observer will continue to trim production and administrative costs in the Nordic region and the Rest of Europe, and maintain cost controls that have contributed to good margins in the US. 'To achieve significant margin improvements, however, we have to get the most out of our intensive service development and thereby increase revenues'.

The Group's home page is at www.observergroup.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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