Daily Research News Online no. 5987 - VNU Results for Second Quarter

VNU Results for Second Quarter

October 2 2006

VNU has announced results for the three months ended June 30, dominated by an adjustment of Euros 71m for costs relating to the sale of the company in May. Excluding this, pro forma operating revenue was up 6% year on year in constant currency to Euros 943m, and operating income up 11% to Euros 114m.

Operating revenue for the quarter, including the deferred revenue adjustment, was Euros 872 million, up 2% including a favorable impact from foreign-currency translation. Pro forma operating income for Q2 was Euros 114m, up 11% in constant currency, before items related to the sale of the company and excluding book gains in 2005; including these items, VNU had a second-quarter operating loss of Euros 6 million, compared with operating income of Euros 101 million last year. The 2006 result includes Euros 34 million of sale-related transaction costs plus the Euros 71m revenue adjustment.

VNU notes that the figures, which combine pre- and post-sale totals do not comply with US GAAP or with the rules for pro forma presentation, but are presented in this manner because the company believes they enable a meaningful comparison of results.

The company says it continues to see good growth from expanded retail measurement, consumer panel and television audience measurement services, from new client initiatives and new products, and from US trade shows and certain print and online media in Europe; but that business was soft for ACNielsen in the US and that its trade magazines continued to face a tough advertising climate in the US and Europe.

For the first six months of 2006, pro forma operating revenue excluding the Euros 71m adjustment was Euros 1,833 million, up 5% in constant currency from H1 2005. Including the adjustment, it rose just 1%. Pro forma operating income for H1 2006 was Euros 185 million, up 13% in constant currency, but most of this is taken up by two sale-related items, the Euros 71m adjustment and Euros 78m in transaction costs. Excluding these and book gains from 2005, operating income was Euros 21 million.

Results by Division

Excluding the negative impact of the deferred revenue adjustment of Euros 71m:

The MI (Marketing Information) division saw operating revenue in constant currency rise 4.5% to Euros 505m, helped by rising sales of ACNielsen's retail measurement services in Latin America, Emerging Markets, Asia Pacific and Canada, partially offset by a decrease in retail measurement revenues in the US due to competitive pressures and a difficult trading environment.

The MMI (Media Measurement & Information) division grew operating revenue by 11% in constant currency, to Euros 268m, driven by continued strong demand for television audience measurement in the US, as Nielsen Media Research continued to expand its national and local coverage, and growth in international markets from advertising information services. Revenue also benefited from the addition of Nielsen BuzzMetrics, in which VNU acquired a majority stake earlier this year, partially offset by lower revenue from Nielsen Entertainment.

Operating revenue for the Business Information division grew only 2% to Euros 170m, due primarily to growth in VNU's recruitment media in the Netherlands, especially Intermediair, and growth in US trade shows. US print publication revenue was down 3%, due to a continued soft advertising market.

VNU was acquired by the Valcon private equity consortium on May 24 this year. It is active in more than 100 countries, with headquarters in Haarlem, the Netherlands, and New York, USA, and employs nearly 41,000 people. The Group home page is at www.vnu.com .