VNU To Reduce MI Workforce

Having recently announced the divestiture of Claritas, VNU this week issued a trading update which combines an optimistic assessment of potential for next year with news of widespread cost efficiencies. The latter includes the shedding of almost 700 jobs over the next 3 years in its Marketing Information (MI) group, partly from natural attrition.

The company expects growth in underlying cash earnings per share at constant currencies to be at the high end of its August estimate of 6% to 9%. On a reported basis, CEPS is expected to decrease between 18% and 21%, mostly due to the negative impact of the US dollar rate but also to reorganization charges of approximately EUR 30m in the MI group and EUR 10m in Directories, plus the Claritas divestiture (see recent article in DRNO).

The statement announces the launch of a 'multiyear business improvement program' called Project Atlas. This is aimed primarily at the North American operations of the MI group and will include simplifying key operational practices, creating a more streamlined and state-of-the-art technology platform, leveraging global purchasing power and incorporating best practices from the successful 'Operation Leading Edge' program in Europe. One of the stated key aims of the Project is to 'free up resources to invest in new initiatives that will generate enhanced top-line growth'. The update says that:

'In 2003, VNU will take a reorganization charge of approximately EUR 30 million, mainly to cover severance costs. Over a three-year period, MI is expected to reduce its work force by almost 700 FTEs, part of which will come from natural attrition. Of the reorganization charges, EUR 4 million has already been spent in 2003 on a one-time strategic assessment of the MI group, and on development of Project Atlas plans'.

The statement also announces a continued improvement in credit statistics and an impairment loss of approximately EUR 35m.

Rob van den Bergh, Chairman and CEO of VNU commented: 'VNU has performed well this year in the face of difficult economic conditions, providing further evidence that our strategy to rebuild the company's portfolio around more recession-resilient information businesses was the correct one'. Van den Bergh says he is pleased with the performance of both the Marketing Information and Media
Measurement & Information groups, which between them represent more than 70% of VNU's revenues, and almost 60% of its operating income.

'We are making substantial progress in our efforts to improve efficiency, reduce costs, divest non-core operations and enhance long-term margins' continues the CEO. 'We expect to realize the positive impact of these efforts starting in 2004'.

VNU expects full-year 2003 organic revenues in its Marketing Information group to grow by 5% to 6% (6 to 7% excluding Claritas Europe), and in its Media Measurement & Information group (MMI) by c.5%. The latter is being driven by the continued 9% top-line growth of Nielsen Media Research in the US.

More detail is available from VNU's corporate web site at www.vnu.com

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