GfK Results for 2003
February 27 2004
GfK has announced its preliminary results for 2003, showing an 'outstanding financial year'. Sales increased by 6.4 per cent to EUR 595.1m and EBIT including income from participations by 37.8 per cent to EUR 68.9m.
Among other highlights, GfK intends to significantly increase dividend to 0.25 Euros - the fourth
consecutive rise, while incoming orders for 2004 already make up 38.0 per cent of the sales target
of 630m Euros.
A strong fourth quarter of 2003 helped the Group to outperform its income forecast for the year once more. GfK ascribes its healthy margin of 11.6% to rapid network expansion, focusing on its key account management system and proactive cost management.
The sales growth figure consists of organic growth of 3.6% plus growth from acquisitions of 6.1%, minus currency effects totalling 3.3%. 65.0% of GfK's sales were attributable to the euro-zone and
therefore only marginally affected by the movement in the currency markets.
Divisional Performance
The report says that all the GfK business divisions made positive contributions to the Group's performance, although conditions differ widely and sales growth / decline for each of the divisions reflects this.
The Non-Food Tracking division achieved the strongest organic growth - 18.0%, with growth from acquisitions contributing a further 6.9%. The Consumer Tracking division achieved a sales increase of 6.2%, attributable to organic growth. The new HealthCare division saw sales rise by 37.6% in the year but only as a result of acquiring US-based V2 GfK, which has been consolidated since 1 July 2003 - this was set against a decline in organic growth by 17.4%. The Media division saw a weak year in 2002, and no recovery in 2003 with reduced sales (organic reduction of 3.8%), while the Ad Hoc research division continued successful restructuring measures in the subsidiaries GfK-CBI in Italy and the Martin Hamblin GfK Group in the UK; and sold the loss-making Swedish subsidiary Borrell. Overall the division saw organic growth of just 1.3%.
Regional Breakdown
Germany accounts for 37.2% of GfK's sales, and growth of 8.2% includes 3.4% organic growth. Sales growth in Western and Southern Europe was moderate at 4.0%, mainly attributable to the consolidation of IFR in France and Significant in Belgium.
As a result of weaker organic growth and currency effects, GfK sales in Northern Europe were down by 8.4%. Business trends at Martin Hamblin GfK in the UK as well as at Borrell in Sweden, which was closed down in the third quarter, failed to meet GfK expectations. However, good sales levels at Martin Hamblin GfK at the year-end are a sign that the difficulties in the market research sector are easing again in the UK.
GfK sales in Central and Eastern Europe, America and Asia and the Pacific all enjoyed double-digit growth, despite negative effects from the strength of the Euro. In Central and Eastern Europe and
Asia and the Pacific nearly all the growth is organic, while the increase in sales in the USA results almost exclusively from the acquisition of V2 GfK.
The number of employees rose by 3.8% from 4,879 full-time employees at the end of 2002 to 5,065 in financial year 2003. The increase is based entirely outside Germany - in GfK's home country the total number remained at just over 1,460.
The Management Board and Supervisory Board will propose a 25% Dividend increase from EUR 0.20 to EUR 0.25 to the Annual General Meeting. The total dividend would therefore rise from EUR 5.2m to EUR 6.5m. Since its IPO in September 1999, the dividend has risen continuously by a total of 92%.
GfK intends to achieve sales of EUR 630m in the current financial year, approximately equal to growth of 5.9%; and to grow its total income more strongly than its sales, with a target margin of around 12% excluding the costs of switching to the international IFRS accounting standards, which will be applied from 2005.
GfK AG will present its full annual accounts at its accounts press conference in Nuremberg, which starts at 10am on 15 April 2004, and at a DVFA analysts' conference in Frankfurt/Main, which starts at 3pm on the same day.
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
