Tough first half for GfK despite quarter-on-quarter improvements

Revenue for the German group was down 5.5% on the same period last year to €557.5m. Adjusted operating income was down 23% to €51.6m, and operating margin was down from 11.3% to 9.3%.

The fall in revenue for the first six months came in spite of higher sales in the second quarter than in the first quarter, although the figures were still down on a year-on-year basis.

The company’s custom research sector, which accounts for the bulk of its business, took the worst hit, with revenue down 11.8% to €335.5m. Adjusted operating income also fell sharply, from €21.4m in the same period last year to €6.5m.

But there was “pleasing” growth in the retail and technology sector, the firm said, where sales rose by 9.9% to €157m, and income was up 12% to €39.3m.

GfK has implemented cost-cutting measures which it said had saved the company €6m in the first half. Costs were taken out through redundancies, salary cuts, a hiring freeze, short-time working and reduced use of outsourced suppliers. Operating expenses have also been cut through renegotiations with suppliers. The firm’s staff complement of 10,233 was up on the start of the year, largely due to acquisitions, but fell by 34 positions in the second quarter.

The firm is expecting sales for the full year to approximately match those for last year, which came in at €1.2bn, but Citi Investment Research & Analysis said this was dependent on a “very ambitious” rebound in the second half of the year.

“The latest indicators suggest that the low point in the economic cycle has been reached,” GfK said. “Expectations regarding the coming months have brightened among companies as well as consumers. It remains to be seen whether these signs will emerge as a sustained trend.”