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Focus on markets – Lead through knowledge GfK. Growth from Knowledge Prof. Dr. Klaus L. Wübbenhorst, CEO, GfK AG

Focus on markets – Lead through knowledge GfK. Growth from Knowledge Prof. Dr. Klaus L. Wübbenhorst, CEO, GfK AG Cheuvreux German Corporate Conference, January 22, 2008. 1. 2. 3. 5. 4. 6. Agenda. Market Research Sector. Business Case. Less is more: from business units to sectors.

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Focus on markets – Lead through knowledge GfK. Growth from Knowledge Prof. Dr. Klaus L. Wübbenhorst, CEO, GfK AG

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  1. Focus on markets – Lead through knowledge GfK. Growth from Knowledge Prof. Dr. Klaus L. Wübbenhorst, CEO, GfK AG Cheuvreux German Corporate Conference, January 22, 2008

  2. 1 2 3 5 4 6 • Agenda Market Research Sector Business Case Less is more: from business units to sectors New management board: Increase of global expertise Outlook for 2007 Appendix

  3. 1 • Market Research Sector

  4. Market research global turnover Europe 43% North America 36% Global turnover USD 24.6 bn Asia and the Pacific 14% Latam 5% Middle East and Africa 2% Source: Esomar Industry Report 2007, Split by region in %, turnover 2006

  5. Top 10 player • Source: Esomar Industry Report 2007, turnover 2006 in USDm • Rate of growth from year-to-year has been adjusted so as not to include revenue gains or losses from acquisitions or divestitures.

  6. Fundamentals of the market research industry Characteristics • Growing above global GDP • More resilient than adverting and less cyclical Specific growth drivers and challenges • Structural demand fuelled by maturing markets • Tougher competition amongst clients • Increasingly complex consumer habits • Globalization of clients • Outsourcing to market researchers • Pricing pressure from procurement policies • Migration towards data collection via the internet

  7. 2 • Business Case

  8. Investment Highlights: well positioned global player Strategy • Clear focus with 5 Star Initiative • High quality of execution Leading positions in top ten countries High level of organic growth in the emerging markets Central and Eastern Europe, Asia and the Pacific and Latin America Strong conversion of earnings into cash

  9. Investment Highlights: attractive risk profile Most diversified player among market research leader • Favorable business mix • High share of panels, continuous and syndicated business Sectors operate on very different cycles Geographical widespread networks • Extension of multi-country studies • Improving key account management (30 of top 50 clients use services in at least three divisions) Balanced portfolio of different revenue categories

  10. Investment Highlights: resilient business model cycle 1999 - 2006 1) Zenith Optimedia 2006/2007 2) ESOMAR Industry report 3) International Monetary Fund

  11. GfK Network: bolt-on acquisitions continue - where 1) Including earn outs 2) Asset deal

  12. GfK Network: bolt-on acquisitions continue – why 1) HealthCare as part of Sector Custom Research

  13. GfK: dynamic progress in emerging markets • Growth regions offer attractive rates of return on investment • GfK is now ranked in the BRIC countries: • Brazil 5 • Russia 2 • India 4 • China 7 • Market leader in Central and Eastern Europe: coverage of 18 countries • Latin American network well positioned: coverage of 22 countries • The core focus of acquisitions and investment is Asia: coverage of 15 countries

  14. Sales and adjusted operating income: continuous growth Sales by Region CAGR: 14.7% Adjusted operating income CAGR: 26.1% 1200 1,112.2 1100 1000 937.3 900 800 669.1 700 595.3 600 559.5 500 400 300 200 100 0 2002 2003 2004 2005 2006 Germany Northern Europe Western and Southern Europe America Asia and Pacific Central and Eastern Europe

  15. GfK and its competitors 2000 vs. 2006: top in top line and bottem line growth Sales in local currency Margin in % Company Currency 2000 2006 ∆ in % 2000 2006 The Nielsen Company USD 2,103.9 3.696.0 75.7 n.a. 5.1 IMS Health USD 1,424.4 1,958.6 37.5 24.6 22.7 Taylor Nelson Sofres GBP 479.3 1,004.2 109.5 9.3 9.9 Kantar Group GBP 512.1 892.9 74.4 9.2 10.2 GfK Group EUR 473.9 1,112.2 134.7 7.8 13.5 Ipsos EUR 329.5 857.3 160.2 7.3 9.3 Synovate GBP 152.8 401.2 162.6 9.9 6.5 Source: Deutsche Bank AG; company reports; own research

  16. Less is more: from business units to sectors 3

  17. GfK Group: successful track record in five business divisions Custom Research Consumer Tracking HealthCare Retail and Technology Media

  18. New reporting: along sources of information A logic basis inspired by the three major sources of information of our services: Point of Consumers and Physicians:data gathered from specific target groups, such as consumers and physicians Custom Research Point of Sales:data gathered at the Point of Sale Retail and Technology Point of Media: data gathered at the Point of Media consumption Media

  19. Less is more: from five business divisions to three sectors business divisions sectors Custom Research Custom Research Consumer Tracking HealthCare Retail and Technology Retail and Technology Media Media

  20. New structure: how we will benefit External Simplification of our reporting system Clearer external communication Internal Synergies for the development and application ofmethodologies, i.e. customer satisfaction Joint use of technology platforms, i.e. online panels

  21. New management board: Increase of global expertise 4

  22. Our new Management Board Member: Debra A. Pruent Jan 1, 2008 COO Custom Research North America, appointment to Management Board 3-year-contract according to Corporate Governance regulations Until Dec 31, COO, GfK Custom Research North America Board Member, Custom Research division 2005-2006 President, GfK NOP Products & Services 2001-2005 NOP World Automotive 1992-2001 Allison-Fisher International 1983-1992 General Motors Corporation

  23. Business division Custom Research: responsibilities Petra Heinlein Debra A. Pruent All except North America Regional responsibility North America ConsumerFinancial ServicesMedia and Communications Business and TechnologyAutomotive Unit responsibility Advantage Top management focus on North America Closer to the customer Leveraging knowledge in areas

  24. GfK Management Board: global and experienced Professor Dr. Klaus L. Wübbenhorst Christian Weller von Ahlefeld Dr. GérardHermet COO Retail andTechnology Wilhelm R.Wessels COO ConsumerTracking, HealthCare, Media PetraHeinlein COO Custom Research All regions except North America Debra A. Pruent COO Custom ResearchNorth America CFO CEO

  25. New structure: timetable New structure starts 1st January 2008 Initial reporting at the end of February with the outlook for 2008 Q1-2008 report will be in the new structure

  26. 5 • Outlook for 2007

  27. 5 Star Initiative: on track Fact-based Consultancy: Establishment of expert teams dedicated to expanding the consultancy services for top management. TOP 3: Top 5 worldwide; in 8 out of the 20 largest markets among the top 3. Global penetration: Marked expansion in Asia and the Pacific and Latin America; present with own companies in virtually every Central and Eastern European country. Full Service: Continuous expansion of our service offering progressed in all business divisions. Excellent financial position:Sales: EUR 1.1 bn (target: EUR 1.5 bn)Margin: 13.5% (target: 13-15%)Ratio of net debt to EBITDA: 2.24 (target: ~2)

  28. Group: guidance Industry: up to 5% GfK Group: • Sales: organic growth more than 5% • Margin: up to 13.5% • Highlighted items: more than EUR 25 million (basically non cash items) • Income from participations: more than EUR 3 million • Net financial expenses: approx. EUR 20 million • Group tax ratio: approx. 30% Order book as of the end of October total 95.6% of expected annual sales, distinctly outstripping the figure for the previous year (93.0%)

  29. Business divisions: guidance

  30. 6 • Appendix

  31. Financial results Q3 2007

  32. Figures Sales up 4.2% to EUR 833.9 m Organic growth of 5.5 % Adjusted operating income at EUR 102.5 m Margin improved to 12.3% compared to 11.5% in first half year of 2007 Cash flowfrom ongoing activity + 34.3% to EUR 111.9 m Earnings per share at EUR 1.31

  33. Highlights • Excellent growth rates in the emerging markets: Central and Eastern Europe, Asia and the Pacific as well as Latin America • Organic growth rates: • Central and Eastern Europe: +12.9% • Asia and the Pacific: +18.0% • Latin America: +23.5% Significant reduction in working capital: shift from EUR 6.5 m inflow to EUR 6.9 m reduction. All outstanding contracts in automotive sector renewed. Excellent order-inflow: Order book as of the end of October total 95.6% of expected annual sales (Q3 2006: 93.0%). Rebound of organic growth rate - in third quarter: 6.7% compared to H1 2007: 4.9%

  34. Key figures 1) Adjusted operating income in relation to sales2) Year end 2006

  35. Free cash flow1) In EUR million Q3 2007 Q3 2006 Change in % Cash flow from ongoing business activity 111.9 +34.3 83.4 -38.3 Capex -22.8 +39.3 -27.5 73.6 Free cash flow2) 69.5 +31.8 55.8 Acquisitions -10.6 +15.0 -9.2 Other financial investments -1.3 - -1.4 Asset disposals 0.5 4.7 - Free cash flow3) 62.3 +24.9 49.9 1) The percentages were calculated on the basis of the half year financial statements in EUR ‘000. 2) Before acquisitions, other investments and asset disposals 3) After acquisitions, other investments and asset disposals

  36. Business divisions1): strong growth in 3rd quarter Sales in EURm Income in EURm Breakdown of growth in % Margin 1) Figures from Management Information System

  37. Regions1):high dynamic in emerging countries Breakdownof growth in % Sales in EURm 1) Figures from Management Information System

  38. Shareholders

  39. Shareholder Structure Private investors17.3% Institutional investors 25.1% USA 9.4% United Kingdom 8.9% France 3.5% Germany 1.9% Others 1.4% Management and Supervisory Board 1.1% GfK-Nürnberg e.V. 56.5% As per November 2, 2007

  40. GfK-Nürnberg e.V. “Verein” or “The Association” Approximately 600 members comprising companies and individuals from all principal private and public sectors. The broad membership base provides an attractive relationship pool. Prime purpose is to promote market research. No operational activities. Chairman, Mr. Hajo Riesenbeck (McKinsey & Company, Inc.), has seat on GfK’s Supervisory Board ensuring short response time even for major corporate decisions. The Association has proved to be a supportive and flexible shareholder, demonstrating its commitment to the growth of GfK. The Association has agreed to dilute stake in GfK to below 40% by- potential capital increases (authorised capital approx. 13 million shares)- authorization for the issue of convertibles (approx. 8 million shares)- step by step exercised stock option program.

  41. Business divisions

  42. Business Divisions: complementary services HealthCare Custom Research Retail and Technology ConsumerTracking Media 11.0% Sales Q3 20071) 46.0% 23.0% 9.0% 11.0% Coverage Global Global Europe Global Global Key information Tailor-made information on pharma, healthcare and veterinary markets Media consumption and audiencemeasurement Retail information on consumer technology markets Consumer buying behaviour Tailor-made services addressing specific marketing issues 50.0 % Approx. Share of Continuous 100.0 % 100.0 % 95.0 % 30.0 % 1) Q3=nine months

  43. Custom Research

  44. Custom Research: key services Sales in EURm Focus Tailor-made information services in over 90 countries (including cooperations), which offer the opportunity of discovering, developing and renewing products and services as well as promoting sales, and improving brand management, communications, pricing and customer loyalty The avantage for clientsMinimizing the risks relating to commercial decisions and increasing profit potential in the longer term through in-depth knowledge of consumers and the business Market positionNo. 5 worldwide and No. 4 in Europe Q3 Margin in per cent Share of Sales in Q3 2007

  45. Indicator smoothed Indicator not smoothed data previous previous year month 12/07 -11.3 -0.1 -47.0 December 2007 Source: EU Commission consumer survey, indicator calculation Development of past 12 months GfK propensity to buy indicator Indicator points Indicator points 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Change according to -10.7 +11.1 -70.6 © by GfK Marktforschung

  46. Retail and Technology

  47. Retail and Technology: key services Sales in EURm FocusInformation services more than 70 countries regarding marketing, logistics and sales in industry and retail for companies operating in the Consumer Technology markets The advantage to clientsDirect access to databases and/or transmission of standard analyses used to support, track and manage short, medium and long-term planning of product and pricing policies, advertising, distribution, sales and logistics Market positionGobal market leader Q3 Margin in per cent Share of Sales in Q3 2007

  48. Global TCE Expenditures Top 600 Billion US$ Sales through consumer retail channels | Retail Dollars | USD $ JAPAN CHINA Source: GfK Marketing Services

  49. Consumer Tracking

  50. Consumer Tracking: key services Sales in EURm FocusInformation services on markets and marketing in relation to consumer habits and attitudes in 24 countries throughout Europe The advantage for clients Clients can select standardized and customized key indicators and analyses to support, monitor and manage medium and long-term decisions on product and pricing policy, distribution and logistics, advertising and promotional activities Market positionEuropean No.2 in continuous consumer research; market leader in Benelux, Germany, Italy, Austria, Switzerland, Scandinavia and in Central and Eastern Europe Q3 Margin in per cent Share of Sales in Q3 2007

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