Modest Gains for GfK

GfK has reported first half results which are 'moderate compared with the highly successful prior year'. Business in two divisions, Custom Research and HealthCare, fell short of expectations, although others forged ahead giving respectable overall organic growth of 4.9%.

Overall sales growth of 3.6% to Euros 553.7m was the result of three factors, with the organic growth helped by acquisitions (+0.5% net) and offset by negative currency effects (-1.8%). Adjusted operating income was Euros 63.5m, not much changed from a very high figure of Euros 63.8m last year. Margin at 11.5% was not far below last year's record 11.9%.

The Group's order situation is further improved - by the end of July, 81.5% of expected Group sales for the year were already posted or included under existing orders, up from 79.4% a year previously. Cash flow from operating activity rose by almost 60% to Euros 56.6m.

Results by Division
All GfK divisions, with the exception of HealthCare, achieved an organic sales increase, with the Retail and Technology division and the Media division 'particularly dynamic'.

In the first six months of 2007, sales in the Custom Research division were up just 3.5% on the prior year at Euros 258.3m, with organic growth of 4.2% offset 1.6% by currency effects. Income totaled Euros 15.0m, 25% down on the previous year. The Group says the modest growth was mostly the result of the non-extension of contracts in the automotive research segment, which affected syndicated business in the North America and Western Europe/Middle East/Africa regions. Other segments within the Custom Research division are said to be 'performing very well'.

Sales in the HealthCare division fell slightly to Euros 61.6m. The Group blames stagnant budgets in the pharmaceutical industry in North America and the UK, and currency effects which reduced sales by 4.2%. Income however grew a healthy 5.3% to Euros 5.9m.

Sales in Retail and Technology of Euros 122.3m in the first half of 2007 were 8.6% up on the prior year's level. Organic growth totaled 9.9% and income rose by 15.2% to Euros 28.2m. At 23.1%, the Retail and Technology division achieved the highest margin of all of GfK's divisions.

The Consumer Tracking division recorded an increase in sales of 1.6% to Euros 49.7m, almost all organic. At Euros 3.1m, income was just below the figure for the same period in the prior year but in line with GfK's expectations.

The Media division achieved an increase in sales of 4.6% to Euros 59.6m, with total growth of 7.9% well above the previous year's H1 figure of 4.8%. Income roughly equalled H1 2006 at Euros 12.3m.

Results by Regional
The Group has six global regions, and says its increased focus on business development in the emerging markets is 'paying dividends' with dynamic performance in these regions.

In Germany, GfK had sales of Euros 135.6m, with sound organic growth of 5.3%. The Western Europe, Middle East and Africa region led the way with Euros 231.7m of sales, 3.7% organic growth. Central and Eastern Europe showed 11.7% organic growth to Euros 32.8m while North America saw only 2.4% growth to Euros 119.1m, reduced 7.3% by the high Euro exchange rate. Latin America and Asia / Pacific are both much smaller regions for GfK at present - the former saw the fastest organic growth - up 24.9% to Euros 11.4m, while the latter increased 17.0%, more than half organic, to Euros 23.1m.


GfK remains upbeat about the rest of the year, expecting to increase sales organically by more than 5% in 2007. The Group's margin is set to be 'up to 13.5%', compared with a previous forecast of 'over 13.5%'.

The Group, which comprises more than 115 companies operating in over 90 countries and currently employs more than 8,400 staff, has a home page 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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