nine months results 2016 - gfk...nov 14, 2016 · © gfk 2016 | q3 2016 results presentation |...

1© GfK 2016 | Q3 2016 Results Presentation | November 14, 2016

NINE MONTHS RESULTS 2016

ANALYST CALL

Gerhard Hausruckinger, Speaker of the Management Board

Christian Diedrich, CFO

GfK SE, November 14, 2016


This presentation constitutes neither an offer nor recommendation to subscribe or buy in any other way securities of GfK SE or any

of the companies that are members of the Group at present or in the future, nor does it form part of such an offer and it should not be

understood as such. The presentation or any part thereof should not form the basis for a contract for the purchase or subscription of

securities of GfK SE or any of the companies that are members of the Group or represent a guarantee in connection with such contract.

All the information contained in this presentation has been established with care. Nevertheless, we cannot guarantee its reliability or

completeness and the information contained herein should not be deemed as a guarantee in this respect.

The information contained in this presentation may be supplemented, amended and updated. Certain statements made herein may

express future expectations, which are based on current opinions and assumptions of the management and are subject to foreseeable

and unforeseeable risks and uncertainties. Actual results, performance and events may differ considerably from the statements

expressed in the present information, partly due to changing business or market conditions and to the growth prospects forecast by the

management of GfK SE. These and other factors may have an unfavorable impact on the results and financial consequences described

in this presentation. GfK SE does not undertake to update or revise statements on future developments, on the basis of new information,

future events or for other reasons. You should not rely on statements made about future developments, which simply express

expectations as of the date of this presentation.

This document does not constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold in

the United States of America without registration or exemption from registration in accordance with the U.S. Securities‘ Act of 1933 in its

currently valid form.

Disclaimer


Agenda

Business Highlights


Financial Results


1

2

Guidance

Gerhard Hausruckinger, Speaker of the Management Board3

Q&A



4


Business Highlights Gerhard Hausruckinger, Speaker of the Management Board


Sales growth in % for 9M 2016

1 Data Investment Management segment isolated. Comprises Kantar, TNS, Millward Brown and The Futures Company, among others. Comparison analysis on revenue basis

GfK and Peers

-1.7

-3.7

-1.8

4.4

2.3

n/a0.3

3.3

n/a

8.0

-0.7

1.6

Data Investment Management1

Ipsos does not report

growth at constant

FX rates

Nielsen does not report

organic growth

Total Organic At constant currency


Consumer Choices Highlights 9M 2016

Consumer

Choices

(CC)

Sales and margin development• Organic growth of 5.4%; FX effect -0.9%

• Margin down by -3.9pts

Point of Sales Measurement• Overall solid organic sales and profit growth

• Strong performance in APAC, CEE/META and LATAM

• Specifically Domestic Appliances and Telecom with good momentum compensating

continued negative development in Consumer Electronics and Photo industry

Media MeasurementBrazil:

• Good progress on improving contractual KPIs

• No revenue recognition in Q3 as contract prolongation not yet signed

• New sales started, but long sales cycles

Kingdom of Saudi-Arabia:

• Data delivery to customer and revenue recognition since January 2016

• Negotiations on contract prolongation to compensate higher set up costs


Consumer Experiences Highlights 9M 2016

Consumer

Experiences

(CE)

Sales and margin development

• Organic growth of -7.4%; FX effect -2.6%

• Margin down by -0.8pts

• Weak order intake during HY1 impacting revenue growth; improved order intake in Q3

Business performance

• Revenue performance remains uneven across the portfolio and regions

• Revenue growth in new product areas – User Experience and Shopper Insights – although

not enough to make up for declines in traditional product areas – most notably brand and

advertising research

• Central Europe and Latin America continue to post sales growth while mature markets in

Northern and Southern Europe and North America have declined

Restructuring activities focused on streamlining the sector’s product

portfolio, sales activities, and operational processes • More stringent commercial activation plans showing early promise – orders up year over

year for Q3

• Streamlining of processes allowing for a significant reduction in personnel and data costs

since December 2015


Financial Results 9M 2016Christian Diedrich, CFO


GfK Group – Y/Y deterioration in revenue, AOI and margin

• Organic revenue decline of -1.7% driven by sector Consumer Experiences

• Inorganic growth driven by NORM and NetQuest, offset by divestiture of ‘Crop Protection and Animal Health Business’

• Headwind from foreign exchange rate of -1.9%

• Adjusted operating income down -17.8m€ Y/Y resulting in a margin deterioration of -1.2pts

• Consumer Choices margin down -3.9pts driven by Audience Measurement and ‘Crop Protection and Animal Health Business’

• Consumer Experiences margin down -0.8pts driven by weak revenue performance

Sales

D Din m€ 2016 vs 2015 2016 vs 2015

Consumer

Choices501.9 1.8% 5.4% -2.7% -0.9% 80.7 -17.6 16.1% -3.9pts

Consumer

Experiences574.6 -7.8% -7.4% 2.2% -2.6% 27.9 -7.4 4.9% -0.8pts

Other 0.5 - - - - -7.4 7.3 - -

Group 1,077.0 -3.7% -1.7% -0.1% -1.9% 101.1 -17.8 9.4% -1.2pts

ActualActual Total Organic Inorganic FX effect Actual

9M 2016Growth rate in % AOI Margin in %


Sales

3 out of 6 regions growing organically

strong growth in Latin America and CEE/META offset by decline in

North America and Europe

62

2

North America 209 m€ Northern Europe 393 m€ CEE/META 92 m€

HY1 Q3 9M HY1 Q3 9M HY1 Q3 9M

Total -8.2% -11.2% -9.2% Total -2.8% -10.6% -5.4% Total -2.4% 0.9% -1.3%

Organic -7.0% -6.5% -6.8% Organic -0.2% -4.8% -1.8% Organic 4.7% 3.0% 4.1%

FX -0.3% 0.0% -0.2% FX -1.9% -2.9% -2.2% FX -7.1% -2.1% -5.4%

Latin America 49 m€ Southern and Western Europe 195 m€ Asia and the Pacific 139 m€

HY1 Q3 9M HY1 Q3 9M HY1 Q3 9M

Total 5.4% 14.5% 8.3% Total -2.0% 3.3% -0.3% Total -3.1% 7.4% 0.3%

Organic 21.1% 6.8% 16.1% Organic -5.6% -0.3% -3.9% Organic -1.0% 3.6% 0.5%

FX -21.2% -0.7% -14.4% FX 0.0% 0.0% 0.0% FX -2.0% 3.9% -0.1%


GfK Group – AOI bridge

-1.8

9M 2015

10.6

9M 2016Mix/Other

9.4

Restructuring/

Utilization

-0.7

0.9

Acquisitions/

Divestitures

0.5

CE revenue

deterioration

-0.4

POS

business

0.2

Media

Measurement

9M 2016 AOI margin compared to 9M 2015 (in pts)


GfK Group – Staff Development

193

96

-3%

9M 2016

13,142

GSC ramp-up

and Other

Acquisition/

Divestment

Sector

CE

-487

Sector

CC

-145

YE 2015

13,485

Productivity and capacity management Scope of consolidation and GSC

-343


Consolidated income statement

In m€

2015

9M

2016

9M

2016 vs. 2015

Changes in %

Sales 1,118.6 1,077.0 -3.7

Gross income from sales 341.3 307.7 -9.8

SGA expenses -229.9 -216.7 +5.8

Other operating expenses (net) -13.5 -165.8 -

Highlighted items 21.0 175.9 -

Adjusted operating income 118.8 101.1 -14.9

AOI Margin 10.6% 9.4% -1.2pts

Highlighted items -21.0 -175.9 -

Operating income 97.9 -74.8 -

Income from participations 2.2 -0.8 -

EBIT 100.1 -75.6 -

EBIT Margin 8.9% -7.0% -15.9pts

Financial result -19.6 -9.6 +51.1

Income before tax 80.5 -85.2 -

Tax on income -29.1 -54.2 -86.2

Tax rate 36.1% -63.7% -

Consolidated total income 51.4 -139.4 -

Earnings per share 1.16 -3.89 -

Tax rate distorted by goodwill

impairment which has no tax impact

-1.7% organic “growth”

-1.9% currency effect

-0.1% from acquisitions/divestments

Incl. -142.0m€ goodwill impairment


Consolidated income statement w/o goodwill impairment

In m€

2015

9M

2016

9M

2016 vs. 2015

Changes in %

Sales 1,118.6 1,077.0 -3.7

Gross income from sales 341.3 307.7 -9.8

SGA expenses -229.9 -216.7 +5.8

Other operating expenses (net) -13.5 -23.8 -76.1

Highlighted items 21.0 33.9 +61.5

Adjusted operating income 118.8 101.1 -14.9

AOI Margin 10.6% 9.4% -1.2pts

Highlighted items -21.0 -33.9 -61.5

Operating income 97.9 67.2 -31.3

Income from participations 2.2 -0.8 -

EBIT 100.1 66.4 -33.6

EBIT Margin 8.9% 6.2% -2.7pts

Financial result -19.6 -9.6 +51.1

Income before tax 80.5 56.9 -29.4

Tax on income -29.1 -54.2 -86.2

Tax rate 36.1% 95.3% +59.2pts

Consolidated total income 51.4 2.7 -94.8

Earnings per share 1.16 0.00 -100.0

Increase of tax expenses driven by

results of a German tax audit (brand

license fee), US taxes, deferred taxes

and non-deductible expenses

Increase from risk provisions regarding

Media Measurement business and

costs related to divestment of ‘Crop

Protection and Animal Health Business’

(already booked in Q2) plus increase in

severances

See next slide

Interest expenses and FX effect

improved


Highlighted items

In m€

2015

9M

2016

9M

Goodwill impairment - -142.0*)

Write-ups and write-downs of additional assets

identified on acquisitions-3.7 -5.1

Income and expenses in connection

with share and asset deals-1.7 -1.0

Income and expenses in connection

with reorganization and improvement projects-12.8 -15.0

Personnel expenses for share-based incentive payments -1.5 -3.2

Currency conversion differences -1.3 0.7

Income and expenses related to one-off effects

and other exceptional circumstances0.0 -10.2

Total highlighted items -21.0 -175.9

Sector CE; all six regions affected

(already booked in Q2)

Includes provisions for potential risks

in Media Measurement business

(largely booked in Q2);

PY: Gain from sale of real estate in

Switzerland

Mainly rise in severances

*) goodwill impairment reflected in the balance sheet: -139.2 m€

(average FX rates vs. spot rates)


Cash flow

In m€

2015

9M

2016

9M2016 vs. 2015Changes in m€

Consolidated total income 51.4 -139.4 -190.8

Amortization (incl. reversal) 47.0 203.4 +156.5

Changes in inventories, receivables, payables 25.0 26.0 +1.0

Others 10.7 62.6 +51.8

Interest result 11.8 10.2 -1.6

Taxes paid -25.7 -32.4 -6.7

Cash flow from operating activity 120.2 130.4 +10.2

CAPEX -66.7 -55.4 +11.4

Acquisitions, other financial investments

and asset disposals-8.1 -2.8 +5.4

Free cash flow after acquisitions,

other investments and asset disposals45.3 72.3 +27.0

Cash flow from financing activity -21.3 -25.4 -4.1

Incl. 142.0m€ goodwill impairment

Improvement in non-operating working

capital (PY: Turkey fraud payments)

and higher tax expense

PY: High investments in fixed assets for

TAM contracts

Includes balance of NetQuest

acquisition and divestiture of ‘Crop

Protection and Animal Health Business’

Increase in taxable income has partly

translated into higher tax payments year

to date


GuidanceGerhard Hausruckinger, Speaker of the Management Board


Guidance 2016

Sales coverage as at the end of September 2016 at 94% of currently predicted annual sales,

which is in line with the historic range of 91% to 96% over the last 5 years.

Sales Coverage

The Company will continue to aggressively drive its transformation initiatives and will do its

utmost to improve results. Despite recent progress in order intake in the Consumer Experiences

sector and continued strong focus on our Media Measurement projects we expect that the

current sales trend will not change in the fourth quarter and that the margin will be below prior

year`s level.

Guidance


Q&AGerhard Hausruckinger, Speaker of the Management Board



GfK Investor Relations Team

[email protected]

http://twitter.com/GfK

+49 911 395 – 2012

STAY IN TOUCH WITH US

mailto:[email protected]


Key financial dates to remember

Trading Statement January 31, 2017 Available online on gfk.com

Annual Report 2016

Financial Statement Press ConferenceMarch 14, 2017 Available online on gfk.com

Q1/ First Quarter Results 2017 May 15, 2017 Available online on gfk.com

Annual General Meeting May 18, 2017 Fuerth

H1/ Half Year Results 2017 August 14, 2017 Available online on gfk.com

Q3/ Nine Months Results 2017 November 13, 2017 Available online on gfk.com

Please contact [email protected] for further information on any of the publications or events


Events to remember

TMT Conference Morgan Stanley November 17/18, 2016 Barcelona

Natixis MidCap Conference November 22, 2016 Paris

ODDO MidCap Forum January 5/6, 2017 Lyon

Kepler Cheuvreux German Corporate

ConferenceJanuary 16, 2017 Frankfurt

Capital Markets Day February 9/10, 2017 Frankfurt

Please contact [email protected] for further information on any of the publications or events


Back-up


GfK Group – Single Q3 2016

• Organic revenue decline of -2.3% driven by sector Consumer Experiences

• Inorganic growth driven by NORM and NetQuest, offset by divestiture of ‘Crop Protection and Animal Health Business’

• Headwind from foreign exchange rate of -0.9%

• Adjusted operating income down -5.5 m€ Y/Y resulting in a margin deterioration of -1.0pts

• Consumer Choices margin down -3.7pts driven by TAM Brazil

• Consumer Experiences margin down -0.6pts driven by weak revenue performance

Sales

D D

in m€Q3 2016 vs

Q3 2015

Q3 2016 vs

Q3 2015

Consumer

Choices166.1 -1.6% 3.0% -4.9% 0.2% 32.0 -6.8 19.3% -3.7pts

Consumer

Experiences189.0 -6.4% -6.7% 2.2% -1.8% 11.8 -2.0 6.2% -0.6pts

Other 0.2 - - - - -1.6 3.3 - -

Group 355.3 -4.3% -2.3% -1.2% -0.9% 42.2 -5.5 11.9% -1.0pts

Actual Actual

Single Q3

2016

Growth rate in % AOI Margin in %

Actual Total Organic Inorganic FX effect


GfK Group – Y/Y quarter view by sector

* for Sales: Organic growth rate

D* D* D* D*

2016 vs 2015 2016 vs 2015 2016 vs 2015 2016 vs 2015

Sales 169.9 9.8% 165.9 3.7% 166.1 3.0% 501.9 5.4%

AOI 27.5 0.3 21.2 -11.1 32.0 -6.8 80.7 -17.6

Margin in % 16.2% -1.1pts 12.8% -6.5pts 19.3% -3.7pts 16.1% -3.9pts

Sales 190.5 -6.0% 195.2 -9.5% 189.0 -6.7% 574.6 -7.4%

AOI 7.7 1.6 8.4 -7.1 11.8 -2.0 27.9 -7.4

Margin in % 4.0% 1.1pts 4.3% -2.8pts 6.2% -0.6pts 4.9% -0.8pts

Sales 0.1 - 0.1 - 0.2 - 0.5 -

AOI -3.0 2.9 -2.8 1.1 -1.6 3.3 -7.4 7.3

Sales 360.5 0.9% 361.2 -3.7% 355.3 -2.3% 1,077.0 -1.7%

AOI 32.1 4.8 26.8 -17.1 42.2 -5.5 101.1 -17.8

Margin in % 8.9% 1.4pts 7.4% -4.0pts 11.9% -1.0pts 9.4% -1.2pts

Q1 2016 Q2 2016

Consumer

Choices

Consumer

Experiences

Other

Group

FY 2016

quarter viewin m€ Actual ActualActual Actual

Q3 2016 9M 2016


1 Rounding differences possible

Maturity profile of financial debt significantly improved vs. prior years

In m€1 2014 2015 30.09.2016

< 3Y 62% 52% 25%

3 - 5Y 6% 34% 41%

> 5Y 32% 14% 34%

Total debt (gross) 389 437 451 Maturing bond fully refunded by

bank term loans and a German

Schuldschein

Revolving Credit Facility

(committed) was extended to 2021

currently not used

Free available Cash of around

80m€

No debt maturities until March

2018 (43m€), refunding peak in

2020 (106m€)

Maturities up to 2028 (12 years)

75% funded for more than 3 years

Cash [93] [130] [173]

Total bank debt (net) 296 307 278

RCF/Credit Lines 279 286 296

Funding structurein %

31

1411

43 51

22

27

Bond

Schuldschein fix

Bank loans

Schuldschein floating

Balanced Profile

nine months results 2016 - gfk...nov 14, 2016 · © gfk 2016 | q3 2016 results presentation |...

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