GfK records significant sales and earnings growth
The first nine months of the 2010 financial year were highly satisfactory for the GfK Group, and its performance in the third quarter serves to underline this success. In the months July to September, GfK recorded significant growth in sales and income, as was the case in the previous two quarters.
At the same time organic sales growth reached a strong 9.2% after 8.0% in the second quarter and 5.3% in the first quarter.
The systematic implementation of the corporate strategy, with a focus on measuring usage of digital media and achieving continued growth in emerging economies, is now bearing visible fruits. "The past nine months have developed for us in an extraordinarily positive manner. For this reason we are very confident and also expect to conclude the 2010 financial year successfully," stated Professor Dr. Klaus L. Wübbenhorst, CEO of the GfK Group.
Economic and financial development
In the first nine months, SALES rose by 10.9% to EUR 932.1 million. This includes organic growth of 7.6%, considerably higher than the 3% growth forecast for the industry as a whole. Currency effects, particularly involving the US dollar, increased sales by 3.2%
ADUSTED OPERATING INCOME totaled EUR 120.4 million, up 34.1% on the previous year.
At 12.9%, the MARGIN was substantially up not only on the prior-year figure of 10.7%, but also on the margin of 11.8% recorded in the first half of 2010.
OPERATING INCOME increased by 62.7% in the first nine months to EUR 93.6 million.
GfK generated EBITDA of EUR 133.1 million, up 37.6% on the previous year.
At EUR 124.4 million after the first nine months, CASH FLOW FROM OPERATING ACTIVITIES was up EUR 24.9 million on the previous year (EUR 99.5 million).
Trends in the sectors
CUSTOM RESEARCH: In the first nine months of the current financial year, sales in the Custom Research sector rose by a pleasing 10.5% to EUR 559.4 million. The earnings trend is also clearly positive. In the third quarter, income increased to EUR 33.5 million. This is almost double the figure of EUR 17.1 million generated in the first nine months of 2009. In the reporting period, the sector achieved a margin of 6.0%, therefore significantly up on the prior year's figure of 3.4%. The sector has now enjoyed a steady improvement in incoming orders and sales for a number of quarters. In particular, business development with clients from the automotive, financial market and IT and telecommunications industries has been positive.
RETAIL AND TECHNOLOGY: Retail and Technology was again the sector with the highest income level in the GfK Group in the first nine months. In the first three quarters, sales rose 14.0% to EUR 270.7 million. To the end of September, the sector in the GfK Group posted income of EUR 79.4 million, up year-on-year by 23.7%. The margin reached 29.4%, an increase of 230 basis points on the high prior-year level of 27.1%. Ongoing success in the sector is partly attributable to the GfK StarTrack global production and reporting system, which allows cost-effective production to the same standards worldwide. During the period under review, the sector benefited in particular from strong demand in the telecommunications and information technology segments. However, the core segments of consumer electronics and do-it-yourself also contributed higher sales than in the same period of the previous year.
MEDIA: In the period from January to September 2010, sales increased by 4.7% year-on-year to EUR 98.3 million. In the same period, Media generated income of EUR 11.2 million (previous year: EUR 12.5 million). The margin was 11.4% after 13.4% in 2009. The Media sector recorded a higher level of incoming orders from clients in the TV segment, among others. In Germany, additional orders resulted from the introduction of the new TC Score metering technology, while the television viewer research contract in the Netherlands was extended. The North American subsidiary GfK MRI generated a higher level of incoming orders than in the previous year thanks to its realignment and the development of the new GfK AdMeasure product.
In addition to its good results for the first nine months, the healthy order book shows that GfK is excellently positioned in the current market environment. At the end of October 2010, the order book already covered 98.0% of budgeted annual sales. Against the comparable figure from the previous year of 94.1%, this represents a considerable upturn.
With this in mind, the management of GfK SE is confident of reaching the upper end of the Group forecast for the year as a whole, which it increased after the first six months. Based on the companies included in consolidation at the start of the year, GfK expects sales to rise by up to 6% in the 2010 financial year, not taking into account currency effects. The margin, which represents the ratio of adjusted operating income to sales, is forecast at up to 13.5%.
The statements made in the first quarter on the highlighted items and capital expenditure for 2010 as a whole remain unchanged.
The Management Board of the GfK Group believes that, with the measures taken, GfK is excellently positioned to outperform the market research sector in terms of organic growth and to further improve its income, including in the medium term. With its high growth rates in the rapidly growing emerging markets and the positive development at Retail and Technology and Custom Research, GfK sees great growth potential and very good income opportunities in the future.
The GfK Group offers the fundamental knowledge that industry, retailers, services companies and the media need to make market decisions. It delivers a comprehensive range of information and consultancy services in the three business sectors Custom Research, Retail and Technology and Media. The No. 4 market research organization worldwide operates in more than 100 countries and employs over 10,000 staff. In 2009, the GfK Group's sales amounted to EUR 1.16 billion. For further information, visit our website: www.gfk.com. Follow us on Twitter: www.twitter.com/gfk_group