NEWS25 February 2010

GfK reports 2009 sales down 4.6% to €1.16bn

Europe Financials

GERMANY— GfK’s sales were down 4.6% to €1,164m in 2009 – but with a marked improvement in business in the final three months of last year, the research group is expecting a return to growth this year.

The 2009 sales decline was in line with expectations and the group exceeded its target for adjusted operating income, which came in at €147m, or 12.6% of sales – close to the prior year’s margin of 13%.

Income was helped by more than €20m in savings from the BISS programme, GfK’s cost-cutting and efficiency drive. Savings were squeezed from “the trimming down of corporate business structures, consolidation of the IT infrastructure, amalgamation of rented premises and the establishment and consolidation of market research offerings”.

Redundancy payments cost the firm €4m over the year, though the firm has not said how many staff were let go. Headcount was up by 366 people at the year-end, though GfK said the rise was mainly due to the acquisition of new companies. Employee numbers were down 158 at 31 December 2009, compared to 30 September 2009.

The picture was mixed for GfK’s three main business lines, with custom and media research down 9.4% and 2.9% respectively, while retail and technology was up 7.2% – a performance GfK said was underpinned by its global StarTrack data production and reporting system “which facilitates cost-efficient production to the same standards worldwide”.

Growth for the retail and technology division was strongest in Asia Pacific – as it was for the group as a whole, with sales in the region up 16% to €74.8m. Latin America followed with an 11% rise in revenue to €35.5m.

Germany, Western Europe, the Middle East, Africa and North America all reported mid single-digit declines, while Central and Eastern Europe saw a 17.8% fall-off in sales. Much of this decline was due to strong currency devaluations of the Polish Zloty and Russian Rouble against the Euro. In local currency terms, Central and Eastern European sales fell by 5.7%.

Looking to 2010, GfK said: “On the assumption of a tangible improvement in economic conditions and a further upturn in its operating activities, GfK expects sales to increase by approximately 3%.”