Daily Research News Online no. 5264 - Strong MMI Division Leads VNU Growth

Strong MMI Division Leads VNU Growth

March 8 2006

VNU has announced 'better-than-expected results' for 2005. The Media Measurement & Information division (MMI) showed 11% organic growth, led by a strong Nielsen Media Research (NMR). Group-wide, organic growth was only 5%. VNU says favourable settlement of tax audits 'more than offset' the $55m cost of the recent IRI settlement.

Earnings Per Share were EUR 1.00, exceeding the previous forecast. Overall revenue growth was hampered by the MI division's performance in Europe, where 'difficult economic conditions' affected both ACNielsen and VNU's trade magazines. MMI's strong showing was led by another strong performance from NMR but also by improved results from majority-owned Internet measurement business NetRatings.

Reported revenues, at EUR 3,457 million, were up 4% (5% at constant currencies) versus 2004 (EUR 3,319m). Organic EBITDA was up 11%, excluding one-time items, exceeding the earlier forecast of high single-digit growth.

In a separate press release today, VNU announced that it has agreed to a public offer from private-equity group that values the company's equity at EUR 7.5 billion, or EUR 28.75 per common share - see today's DRNO.

Effective cost management delivered more of the company's revenue growth to the bottom line. Reported EBITDA of EUR 587m was up 2%, reflecting the negative impact of IMS Health merger costs (EUR -30m) and IRI settlement costs (EUR -47m) in 2005, and restructuring provisions (EUR -38m) and a real estate gain (EUR 14m) in 2004.

CEO Rob van den Bergh said results reflect 'the continued strong demand for our consumer, media and marketing information services, the ongoing strength of our trade show business, a modest improvement in advertising among a number of our trade magazines, and our relentless focus on managing costs across the entire company.' The company deems it too early in the year to give any earnings guidance for 2006.

Divisions

VNU Marketing Information (MI) saw double-digit gains in Latin America and Emerging Markets but a slight decline in Europe, where poor economic conditions 'held down client spending on discretionary research projects'. MI achieved 6% organic revenue growth outside Europe, led by double-digit increases in Latin America and Emerging Markets (including Eastern Europe), and overall organic revenues up 4%.

The group's organic EBITDA rose 14%, excluding ACNielsen Europe and one-time costs. Operating margin rose to 15.3% from 13.5% in 2004, helped by two major efficiency programs - Project Atlas (North America) and Project Gol (Latin America). MI plans to expand these programs to other parts of the business in 2006.

During the year, ACNielsen Europe continued the rollout of its new data factory, with successful launches in the Netherlands and Belgium, and plans to introduce the system in France, Italy and the UK in 2006.

The Media Measurement & Information (MMI) group delivered strong organic revenue growth of 11%, fuelled by another strong performance from Nielsen Media Research in the US, and growth for 61% owned NetRatings. Reported revenues rose 8%, to EUR 968m.

Organic EBITDA climbed 19%, driven by the strong top-line growth of Nielsen Media Research in the US. On a reported basis, EBITDA rose 14%, to EUR 271 million.

As of January 1, 2005, VNU adopted International Financial Reporting Standards (IFRS), in accordance with European Union regulations. VNU is online at www.vnu.com , where more detailed financial information can be viewed.

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