Daily Research News Online no. 2549 - VNU Results for First Half 2003

VNU Results for First Half 2003

August 18 2003

VNU has reported its interim financial statement for the first six months of 2003, showing 'solid underlying results despite weak global economic conditions'. First-half organic growth was led by strong performances from ACNielsen and from the Media Measurement & Information business.

Cash earnings before goodwill amortization, impairment charges and extraordinary items remained stable in the first half of 2003 at EUR 201 million. However, at constant currencies, cash earnings would have been EUR 230 million, an increase of 15%. Cash earnings per share declined by 2% to EUR 0.80 from EUR 0.82 but again, at constant currencies, would have been EUR 0.92, an increase of 12%.

Net earnings increased 11% to EUR 103 million from EUR 93 million. Due largely to the weakness of the US dollar versus the Euro, total reported revenues decreased by 10% to EUR 1,939 million from EUR 2,164 million, and operating income decreased by 3% to EUR 329 million from EUR 338 million. At constant-currency exchange rates, total revenues would have amounted to EUR 2,205 million, or an increase of 2% versus 2002, and operating income would have been EUR 370 million, up 9% versus 2002.

Rob van den Bergh, Chairman and CEO of VNU, points out that 'on a reported basis, our results were negatively impacted by the strength of the euro relative to the US dollar. Reported results were also impacted by investments in the future growth of our company. While these investments will have some impact on short-term margins, they are absolutely necessary to maintain our competitive advantage and position VNU for long-term momentum in the marketplace'.

The Marketing Information and Media Measurement & Information groups showed solid revenue growth and demand is strong for their services. 'The strength of these businesses' says van den Bergh 'was somewhat offset by weakness in our Business Information segment, which is still suffering from the downturn in advertising markets worldwide'.

Performance of the MR-related businesses within the group were as follows.

VNU Marketing Information, within which ACNielsen is the largest business, achieved 5% organic growth in total revenues in the first half of 2003. However, as a result of the weak US dollar, the group's reported total revenues decreased by 10% to EUR 889 million from EUR 989 million in 2002. ACNielsen's organic revenue growth amounted to 6%. The group's operating income decreased by 26% to EUR 70 million from EUR 95 million, due to the impact of the devalued US dollar, start-up expenses for the Procter & Gamble contract, and the development of the Internet-based Category Business Planner. The operating margin of the group in the first half of 2003 was 7.9% (9.6% in 2002).
The Media Measurement and Information business saw organic revenue growth of 4% in the first half of 2003, largely driven by the performance of Nielsen Media Research in the United States. However, reported total revenues of this group decreased by 12% to EUR 464 million from EUR 529 million due to the weakness of the US dollar.
In spite of the lower US dollar, the group's operating income increased by 17% to EUR 97 million from EUR 83 million, due primarily to improved results from Nielsen Media Research in the United States and from NetRatings, VNU's 65%-owned Internet Measurement business. Nielsen Media Research in the United States grew its organic revenues by 9% in the first half of 2003, due to continued strong demand for its TV ratings and related services. Agreements with NBC and Viacom / CBS, as well as plans for the expansion of Local People Meters and the National People Meter sample in the US, contributed to the buoyancy of this division. [see DRNO www.mrweb.com/drno/news2515.htm ].
NetRatings' revenues grew at a double-digit rate, reflecting increased demand and improved business conditions, while operating income improved as a result of greater operating efficiencies and a favourable comparison with 2002, when the company recorded one-time charges totalling EUR 13 million related to restructuring measures and the Jupiter Media Metrix patent case settlement.

VNU invested EUR 73 million for acquisitions in the first half of 2003, including a payment relating to legacy tax liabilities of Nielsen Media Research from the time of its acquisition by VNU.

Credit statistics improved strongly - at June 30, the group had a net debt position of EUR 3,373 million, down from EUR 3,526 million at the end of 2002.

For the financial year 2003, VNU will pay an interim dividend of EUR 0.12 per common share, unchanged from the 2002 interim dividend and payable on August 27, 2003.

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