NEWS30 January 2013

GfK probes Turkish irregularities as 2012 revenues rise 10.2%

Europe Financials Legal

GERMANY — GfK Group has posted preliminary figures showing a 10.2% increase in its full-year revenue to approximately €1.5bn, though this will be impacted by the firm announcing a provision of approximately €21m related to irregularities in its Turkish subsidiary.

The research giant’s figures, which will be formally approved and announced on 12 March, indicate growth for the company in all six of its regional markets. Total company generated revenues amounted to €1.51bn compared with €1.37bn in the previous year. Adjusted operating income totalled €187m, slightly down on 2011’s €187.7m.

The 0.7% dent in operating income has been unaffected by the irregularities and potential historic tax and social security obligations arising from the company’s Turkish subsidiary, GfK Arastirma Hizmetleri. However, consolidated total income will be impacted. The company has launched an investigation into the matter and told investors that initial findings indicate that former local management in Turkey collaborated to defraud GfK through tax and social security avoidance schemes over several years.

In a statement, the company said: “GfK has voluntarily self-reported this matter to the authorities in Turkey for the period in question. The total expected costs are approximately €21m. GfK will be working with local authorities in Turkey regarding the issue and will explore potential criminal and civil charges against the former Turkish management team and other responsible persons. GfK has taken the necessary measures to maintain the highest level of service to customers. Turkey is an important market for GfK and a key component of its growth strategy. Business activities will remain unchanged and the company will continue to invest in the region going forward.”

GfK says that both of its research offerings – Consumer Experiences and Consumer Choices – contributed to the firm’s growth. The former’s sales were up by 12.7% globally, while the latter’s rose by 6.5%. The North America and Asia Pacific region accounted for the biggest gains, up 33.2% and 29.7% respectively.

The company adds that in Northern Europe, progress was most noticeable in the fourth quarter helping to “more than compensate for revenue declines in the first nine months”. Latin America was its second strongest market in terms of organic growth, just behind Asia Pacific (up 13.8% and 17% respectively.)