GfK implements cost-cutting measures as sales, income decline

GERMANY-- Staff recruitment activity has been put on hold throughout much of the GfK group, a spokesman said today, as the company reported declines in sales and profit for the first-quarter of the year.

Sales were down 1.3% – or 4.6% on an organic basis – to €264.7m while adjusted operating income fell 35.7% to €14.8m.

A hiring freeze is one of a number of measures GfK is taking to keep costs in check amidst the global economic downturn.

Certain companies within the group will introduce short-time working to deal with a slowdown in business, while salary cuts and redundancies are also on the cards, the spokesman said.

Job cuts are most likely to come from within the automotive, healthcare and financial services teams that are part of the custom research sector, where sales were down 7.7% to €159m.

But according to the spokesman, there are no groupwide targets for headcount reductions, nor will the cost-saving measures be applicable in all areas of the business.

Hiring will continue in the retail and technology sector, for instance, as sales there rose 14.2% to €72.5m while income was up 16.7% to €14.8m.

The media sector also saw growth in sales to 4% to €31.4m, although income dropped by 26% to €4m.

By region, GfK recorded good growth in Latin America, Asia and the Pacific, however it saw declines in central and eastern Europe, Germany, other western European countries, the Middle East, Africa and North America.

The first-quarter performance follows on from a weak Q4 last year, which caused GfK to miss its target of 6% organic growth for 2008.

Management said it was not expecting an improvement in sales and income until the second-half of 2009, at which time it also hopes to start feeling the effects of BISS – its initiative to introduce new technology to drive new services and to save costs through the consolidation of IT functions and office locations.

Author: Brian Tarran