Press conference on annual results 2013
Nuremberg, 12 March 2014 – GfK continues its transformation of the company and plans to largely conclude it in 2014. In the second full year of the transformation, adjusted operating income grew by 1.6 percent to €190.4 million. The margin increased to 12.7 percent and is in line with the guidance. Cash flow from operating activity improved by €49 million to €164 million. Organic sales growth amounted to 0.8 percent. At €1,494.8 million, sales were slightly below the previous year’s figure (2012: €1,514.7 million) due to currency effects. EBITDA increased by 16.1 percent to €225.4 million. GfK’s strategy of expanding the digital product range is beginning to bear fruit and will be further strengthened through investments also in the future. Consolidated income was affected by the previously communicated goodwill impairment.
Sales of the GfK Group grew by 0.8 percent year-on-year in organic terms. Currency effects impacted negatively by 2.8 percent, as a result of which sales went down 1.3 percent overall in comparison with the previous year to €1,494.8 million.
Cash flow from operating activity improved by €49 million (42.6 percent) year-on-year to reach €164 million due to a positive development in working capital. Free cash flow after investments was €46.6 million and thus improved by €109 million compared to last year.
Adjusted operating income rose by 1.6 percent to €190.4 million. This improvement was achieved despite significant transformation efforts which could be compensated by a switch of pension plans in Switzerland and by improvements of the operational performance. The margin (adjusted operating income in relation to sales) was 12.7 percent, up from 12.4 percent in the previous year and therefore in line with expectations. Thus EBITDA improved by 16.1 percent to reach €225.4 million.
Consolidated income of the GfK Group was affected by the goodwill impairment already announced in December and amounted to €-42.1 million. Without the impairment, an increase of 13.1 percent in comparison to the previous year and a total of €72.5 million would have been generated. Adjusted growth prospects of the Consumer Experiences sector led to the impairment on goodwill from earlier acquisitions in the regions North and Latin America, Southern and Western Europe, and, to a smaller extent, in Central Eastern Europe/META.
GfK achieved highest overall sales growth in Central Eastern Europe/META. In addition to this region, Asia and the Pacific as well as Latin America both contributed considerably to organic growth which, however, was strongly affected by currency effects. For the industry, the im-portance of this region is growing and already accounts for a quarter of GfK’s business. Despite a slight decline in sales, the greatest share of sales was still attributable to the Northern Europe region.
The Supervisory and Management Boards will propose to the Annual General Meeting on 27 May 2014 an unchanged dividend pay-out of €0.65 per share for the 2013 financial year.
Matthias Hartmann, CEO of GfK SE, comments: “In a demanding market and currency climate, 2013 was the second full year of transformation for GfK. We intend to largely conclude the transformation of the company in 2014 and considerably increase our investment. Our focus continues to be on shifting toward digital products. We also intend to expand our high-margin operations further.”
Outlook
The Management Board of GfK aims to conclude the key transformation projects in 2014 and increase investment. This includes, for instance, the establishment of new panels for the major audience measurement con-tracts in Brazil and Saudi Arabia, investment into the measurement of mobile device data, the retail panel platform, and further product innovations.
In the Consumer Experiences sector, the focus is on portfolio expansion into more profitable business areas and digital products. At the same time, purely local and less profitable custom research projects shall be reduced. Consequently, Consumer Experiences will not make any substantial contribution to sales growth in the current financial year. The sector is expected to contribute less than 60 percent to the sales of the Group.
In the Consumer Choices sector, new growth and margin potential shall be consistently exploited. The expansion of existing retail panels as well as new panels shall successively contribute to the increase in sales and in-come. In addition, Audience Measurement shall drive forward its successful internationalization. The Consumer Choices sector is expected to achieve considerably more rapid growth and improve its sales share to more than 40 percent.
The year started in line with expectations. As at the end of January 2014, sales coverage was already 42.0 percent of predicted annual sales (2013, invoicing based coverage: 39.5 percent).
For 2014, the company is expecting organic growth of between 1 and 2 percent as well as a margin of between 12 and 12.5 percent. For 2015, the Group expects stronger organic growth above that of the market, meaning an increase in market share. The GfK Group also intends to continue growing faster organically than the market in 2016. The aim is to then achieve a margin of between 14 and 15 percent.
About GfK
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