Adolescent Development. Adolescents are: Age: 10-19 40.7 million.
Annual Results 2016 - GfK › fileadmin › user_upload › website...2017/03/14 · 2016 vs. 2015...
Transcript of Annual Results 2016 - GfK › fileadmin › user_upload › website...2017/03/14 · 2016 vs. 2015...
1© GfK 2017 | Analyst call | March 14, 2017
Annual Results 2016GfK SE – Analyst Call
March 14, 2017
2© GfK 2017 | Analyst call | March 14, 2017
2016:
Setting the course in a challenging yearGerhard Hausruckinger | Speaker of the Management Board and CCO
GfK SE
March 14, 2017
3© GfK 2017 | Analyst call | March 14, 2017
2016: Setting the course in a challenging year
Good start in Q1
Unsatisfying Q2
- CE: weak order intake
- Start-up difficulties in important projects
(particularly TAM Brazil)
- Decrease in margin despite cost reduction
measures
Preparation and evaluation of alternative
strategic options
Still unsatisfactory sales and margin
development despite some progress in order
intake
Strong focus on
- Clients & growth
- Speed & simplicity
- Commitment & enablement
Support of KKR transaction
1st half of 2016 2nd half of 2016
4© GfK 2017 | Analyst call | March 14, 2017
Netquest (acquisition)
Leading provider of:
Access panels
Behavioral data
High-quality, cross-device digital panel
solutions
Strong presence in Spain, Portugal and
Latin America
Geographic expansion
underway
Digital innovations continue to be major focus
SUPERCRUNCH by GfK (own initiative)
Data scientists, software experts,
consultants and industry specialists
Automated, user-defined analyses
From data science consultancy
to full service software
Expansion beyond existing
GfK product portfolio
5© GfK 2017 | Analyst call | March 14, 2017
Key figures for 2016
Adjusted operating income of 155.3 m€ (2015: 187.6 m€)
Margin of 10.5% (2015: 12.2%)
Consolidated total income -136.5 m€ (2015: 40.7 m€)
Consolidated total income w/o goodwill impairments: 0.5 m€ (2015: 80.1 m€)
Cash flow from operating activity decreased to 146.2 m€ (2015: 170.9 m€)
Investments amounting to 102 m€ (2015: 137 m€)
Sales 1,484 m€ (2015: 1,543 m€)
Organic growth -1.7%
Overall growth due to currency effects -3.9%
Growth
Income
Cash Flow &
Investment
6© GfK 2017 | Analyst call | March 14, 2017
Sales growth in % for FY 2016
1 Data Investment Management segment isolated. Comprises Kantar, TNS, Millward Brown and The Futures Company, among others. Comparison analysis on revenue basis
GfK, IPSOS and Nielsen report final figures, WPP reports on preliminary basis
GfK and Peers
-1.7
-3.9
-2.2
4.1
2.2
n/a
-0.1
3.0
n/a
9.7
-0.9
0.4
Data Investment Management1
Ipsos does not report
growth at constant
FX rates
Nielsen does not report
organic growth
Total Organic At constant currency
7© GfK 2017 | Analyst call | March 14, 2017
2016: Key figures of the financial yearChristian Diedrich | CFO
GfK SE
March 14, 2017
8© GfK 2017 | Analyst call | March 14, 2017
GfK Group – full year results
Y/Y decline 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 -1.6%, mainly impacted by GBP
• Adjusted operating income down -32.3m€ Y/Y resulting in a margin deterioration of -1.7pts
• Consumer Choices margin down -4.5pts driven by TAM Brazil and AutoCat
• Consumer Experiences margin at 6.7% – margin decline of -0.1pts Y/Y despite strong performance in Q4
• Improvement in sector Other due to tight management of spending and reduced performance based remuneration
Sales
D Din m€ 2016 vs 2015 2016 vs 2015
Consumer
Choices680.3 -0.1% 4.1% -3.5% -0.7% 114.6 -30.5 16.8% -4.5pts
Consumer
Experiences803.0 -6.5% -6.4% 2.2% -2.3% 54.0 -4.9 6.7% -0.1pts
Other 0.5 - - - - -13.3 3.1 - -
Group 1,483.8 -3.9% -1.7% -0.5% -1.6% 155.3 -32.3 10.5% -1.7pts
ActualActual Total Organic Inorganic FX effect Actual
FY 2016Growth rate in % AOI Margin in %
9© GfK 2017 | Analyst call | March 14, 2017
Sales 2016 in m€
3 out of 6 regions growing organically
Strong organic growth in Latin America and CEE/META offset by
decline in North America and Europe
62
2
North America 290 m€ Northern Europe 537 m€ CEE/META 128 m€
9M Q4 FY 9M Q4 FY 9M Q4 FY
Total -9.2% -11.0% -9.7% Total -5.4% -9.7% -6.6% Total -1.3% 7.8% 1.1%
Organic -6.8% -7.1% -6.9% Organic -1.8% -2.8% -2.1% Organic 4.1% 7.8% 5.1%
FX -0.2% 0.9% 0.1% FX -2.2% -3.1% -2.4% FX -5.4% 0.0% -4.0%
Latin America 70 m€ Southern and Western Europe 270 m€ Asia and the Pacific 189 m€
9M Q4 FY 9M Q4 FY 9M Q4 FY
Total 8.3% -9.0% 2.6% Total -0.3% 4.8% 1.0% Total 0.3% 7.5% 2.1%
Organic 16.1% -14.9% 5.4% Organic -3.9% 0.6% -2.7% Organic 0.5% 7.4% 2.3%
FX -14.4% -0.5% -9.3% FX 0.0% 0.0% 0.0% FX -0.1% 0.5% 0.1%
10© GfK 2017 | Analyst call | March 14, 2017
1.0
0.5
-1.7
12.2
Acquisitions/
Divestitures2015
-0.3
CE revenue
deterioration
-0.9
POS
business
-0.2
Media
Measurement
-1.8
10.5
Restructuring/
Utilization
Mix/Other 2016
FY 2016 AOI margin compared to FY 2015 (in pts)
GfK Group – AOI Margin Bridge
11© GfK 2017 | Analyst call | March 14, 2017
168
78
-416
YE 2016
13,069
GSC ramp-up
and Other
Acquisition/
Divestment
Sector
CE
-581
Sector
CC
-81
YE 2015
13,485
Productivity and capacity management Scope of consolidation and GSC
GfK Group – Staff Development
12© GfK 2017 | Analyst call | March 14, 2017
GfK Group: Consolidated income statement
In m€ 2015 2016
2016 vs. 2015
Changes in %
Sales 1,543.4 1,483.8 -3.9
Gross income from sales 481.5 424.7 -11.8
SGA expenses -302.2 -296.5 +1.9
Other operating expenses (net) -75.1 -183.5 -144.3
Highlighted items 83.4 210.5 +152.3
Adjusted operating income 187.6 155.3 -17.2
AOI Margin 12.2% 10.5% -1.7pts
Highlighted items -83.4 -210.5 -152.3
Operating income 104.2 -55.2 -
Income from participations 2.0 5.2 +157.2
EBIT 106.2 -50.1 -
EBIT Margin 6.9% -3.4% -10.3pts
EBITDA 231.2 183.1 -20.8
EBITDA Margin 15.0% 12.3% -2.7pts.
Financial result -18.3 -12.7 +30.6
Income before tax 87.9 -62.8 -
Tax on income -47.2 -73.7 -56.3
Tax rate 53.7% -117.5% -
Consolidated total income 40.7 -136.5 -
Earnings per share in € 1.01 -3.85 -
Tax rate distorted by goodwill impairment
which has no tax impact
-1.7% organic “growth”
-1.6% currency effect
-0.5% from acquisitions/divestments
Incl. -136.9m€ goodwill impairment
Interest expenses and FX effect improved
13© GfK 2017 | Analyst call | March 14, 2017
GfK Group: Highlighted items
In m€ 2015 2016
Goodwill impairment -39.4 -136.9*)
Write-ups and write-downs of additional assets
identified on acquisitions-4.3 -16.5
Income and expenses in connection
with share and asset deals+8.7 -4.7
Income and expenses in connection
with reorganization and improvement projects-22.8 -22.1
Personnel expenses for share-based incentive payments -1.9 -7.4
Currency conversion differences -2.2 +0.3
Expenses from litigation, compliance cases and
terminated projects-22.9 -16.9
Remaining highlighted items +1.5 -6.4
Total highlighted items -83.4 -210.5
Sector CE; all regions affected
except for CEE/META
Including impact of provisions for Media
Measurement risks.
2015: Mainly write-down on Mobile Insight /
Location Insight and CPIMS/NEO
*) goodwill impairment reflected in the balance sheet: -137.0m€
(average FX rates vs. spot rates)
Mainly severance payments
Including impact of KKR transaction
Reassessment of growth prospects
in sector CE
14© GfK 2017 | Analyst call | March 14, 2017
Assets in m€ Dec. 31, 2015 Dec. 31, 2016 Change in m€ Share 2016 in %
Goodwill 774.0 642.7 -131.3 37.3
Other non-current assets 447.7 422.8 -24.9 24.6
Non-current assets 1,221.7 1,065.5 -156.2 61.9
Trade receivables 396.3 408.8 +12.6 23.8
Other current assets 184.9 244.3 +59.3 14.2
Assets held for sale 39.4 2.3 -37.1 0.1
Current assets 620.6 655.4 +34.8 38.1
Assets 1,842.3 1,720.9 -121.4 100.0
Equity and liabilities in m€ Dec. 31, 2015 Dec. 31, 2016 Change in m€ Share 2016 in %
Equity 720.5 538.2 -182.3 31.3
Non-current financial liabilities 256.4 451.0 +194.6 26.2
Other non-current liabilities 184.3 214.8 +30.5 12.5
Non-current liabilities 440.7 665.8 +225.1 38.7
Operating liabilities 257.9 251.2 -6.7 14.6
Other current liabilities 415.6 265.6 -150.1 15.4
Liabilities held for sale 7.6 0.1 -7.4 0.0
Current liabilities 681.1 516.9 -164.2 30.0
Equity and liabilities 1,842.3 1,720.9 -121.4 100.0
Change includes goodwill impairment
2015: Mainly 'Crop Protection and Animal
Health Business'
2016: Real estate Switzerland
Increase mainly in bank balances
Change includes goodwill impairment,
dividend payments and currency effects
Change includes repayment and refinancing
of bond
GfK Group: Consolidated balance sheet
15© GfK 2017 | Analyst call | March 14, 2017
GfK Group: Cash flow
In m€ 2015 20162016 vs. 2015Changes in m€
Consolidated total income 40.7 -136.5 -177.2
Amortization (incl. reversal) 128.8 234.7 +106.0
Changes in inventories, receivables, payables -4.3 -10.8 -6.6
Others 32.9 102.0 +69.1
Interest result 15.8 12.4 -3.4
Taxes paid -43.0 -55.6 -12.7
Cash flow from operating activity 170.9 146.2 -24.7
CAPEX -94.1 -71.0 +23.1
Acquisitions, other financial investments
and asset disposals17.8 -0.4 -18.2
Free cash flow after acquisitions,
other investments and asset disposals94.6 74.8 -19.8
Cash flow from financing activity -59.4 -32.1 +27.3
Incl. 136.9m€ goodwill impairment
Improvement in non-operating working
capital (2015: Turkey fraud payments) and
higher deferred tax expense (=non-cash)
Reduced investments in panel set-up and
software
Includes balance of Netquest acquisition and
divestiture of ‘Crop Protection and Animal
Health Business’
Increase in current tax expense has
translated into higher tax payments
year to date
16© GfK 2017 | Analyst call | March 14, 2017
In m€ 2014 2015 2016
< 3Y 62% 52% 25%
3 - 5Y 6% 34% 41%
> 5Y 32% 14% 34%
Total bank debt (gross) -389 -437 -449 Maturing bond fully refunded by
bank term loans and German
Schuldscheine
Revolving Credit Facility
(committed) was extended to
2021, currently not used
Maturities up to 2028 (11 years)
75% funded for more than 3 years
Cash increased to 175m€
Cash 93 130 175
Total bank debt (net) -296 -307 -274
RCF/Credit Lines 279 286 282
Ø YE Total Interest 3.97% 3.23% 1.52%
Funding structurein %
31
1411
43 51
22
27
Bond
Schuldschein fix
Bank loans
Schuldschein floating
Balanced Profile
Maturity profile of financial debt significantly improved vs. prior years
17© GfK 2017 | Analyst call | March 14, 2017
63 6849
28 26
22
9
43
31
0
40
80
120
160
200
2014 2015 2016
100
137*
102
In m€
2016 Business expansion
investment at reduced level
(2015: Largest investments for
Audience Measurement projects)
Ongoing high investment in IT
Infrastructure and Data &
Technology
Business Expansion Financial Investment and NPD deal (2015)Replacement
* Includes effect of unbundling of cross shareholding with The NPD Group.
GfK Group – Investments
18© GfK 2017 | Analyst call | March 14, 2017
OT CECC
20 21 20
29 30
48
10 7
9
0
20
40
60
80
100
2014 2015 2016
59 58
78
In m€
In 2016 increasing
amortization/depreciation in
Consumer Choices due to
• Audience Measurement projects
• StarTrack/Neo
investment of the past
• AutoCat ramp-down
GfK Group – Amortization/Depreciation
19© GfK 2017 | Analyst call | March 14, 2017
Reduction of complexity continued
2016: Number of legal entities reduced to 172
ReductionExpansion Entities as at Dec 31st
• Total number of entities has been reduced
from 182 to 172 by end of 2016
• Acquisition of Netquest (8 entities)
• 19 entities were merged, sold or liquidated
• On January 1, 2017, three more entities
were merged into other existing entities
• Streamlining efforts will continue
Number of legal entities
224
209203 201
189184 182
172
6
810 11
49 9
21
1412
23
9 11
19
150
170
190
210
230
2009 2010 2011 2012 2013 2014 2015 2016
-23%
20© GfK 2017 | Analyst call | March 14, 2017
2017: New momentum for a successful
future of GfKGerhard Hausruckinger | Speaker of the Management Board and CCO
GfK SE
March 14, 2017
21© GfK 2017 | Analyst call | March 14, 2017
Guidance 2017
Sales coverage at the end of January 2017 was 43.2% of predicted annual sales (2016: 43.8%),
which is in line with the historic range of 37% to 44% over the last 5 years.
Sales Coverage
GfK expects a continued challenging competitive environment. The risks especially with respect
to the TV Audience Measurement contracts in Brazil and the Kingdom of Saudi Arabia will
continue into the current fiscal year. For 2017 the group expects, depending on the mentioned
challenges, a sales development slightly above 2016 and an AOI margin (adjusted operating
income against sales) in the same range as 2016.
Guidance
22© GfK 2017 | Analyst call | March 14, 2017
Voluntary takeover offer by KKR
Offer price of
€43.50 per share;
GfK Verein supports
offer (Dec. 21, 2016)
Additional 10.06% of the
share capital to be
attributed to Acceleratio
(March 2, 2017)
New momentum
for a successful
future of GfK
GfK‘s Management and
Supervisory Boards
support offer
(Dec. 30, 2016) All completion conditions
satisfied (March 2, 2017)
Future shareholder structure :
85.85% GfK Verein and Acceleratio
14.15% FreefloatKKR announces
voluntary takeover
offer (Dec. 8, 2016)
Shareholding quota of
tender amounts to
19.33% at expiry of
acceptance period
(March 1, 2017)
Market research
industry know how
International
network
Track record of
successful investments
KKR‘s engagement is promising due to
23© GfK 2017 | Analyst call | March 14, 2017
New CEO as of March 15: Peter Feld
Peter Feld
Most recently: CEO of WMF Group
Before: Member of Management Board of
Beiersdorf
Previous companies: Johnson & Johnson,
Procter & Gamble
24© GfK 2017 | Analyst call | March 14, 2017
Q&A
25© GfK 2017 | Analyst call | March 14, 2017
Appendix
26© GfK 2017 | Analyst call | March 14, 2017
GfK Group – single Q4 2016
Y/Y decline in revenue, AOI and margin
• Organic revenue decline of -1.8% driven by sector Consumer Experiences
• Inorganic growth driven by Netquest, overcompensated by divestiture of ‘Crop Protection and Animal Health Business‘
• Headwind from foreign exchange rate of -1.0%
• Adjusted operating income down -14.5m€ Y/Y resulting in a margin deterioration of -2.9pts
• Consumer Choices margin down -5.9pts driven by TAM Brazil and AutoCat
• Consumer Experiences strong performance, margin improvement of 1.4pts due to efficiency efforts and cost management
• Sector Other Y/Y deterioration due to timing effects
Sales
D D
in m€Q4 2016 vs
Q4 2015
Q4 2016 vs
Q4 2015
Consumer
Choices178.4 -5.1% 0.7% -5.7% -0.2% 33.9 -12.9 19.0% -5.9pts
Consumer
Experiences228.4 -3.2% -3.7% 2.2% -1.6% 26.1 2.5 11.4% 1.4pts
Other 0.0 - - - - -5.8 -4.2 - -
Group 406.8 -4.2% -1.8% -1.5% -1.0% 54.2 -14.5 13.3% -2.9pts
Actual Actual
Single Q4
2016
Growth rate in % AOI Margin in %
Actual Total Organic Inorganic FX effect
27© GfK 2017 | Analyst call | March 14, 2017
GfK Group – full year results per quarter per sector
Organic sales development
D D D D D
2016 vs 2015 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% 178.4 0.7% 680.3 4.1%
AOI 27.5 0.3 21.2 -11.1 32.0 -6.8 33.9 -12.9 114.6 -30.5
Margin in % 16.2% -1.1pts 12.8% -6.5pts 19.3% -3.7pts 19.0% -5.9pts 16.8% -4.5pts
Sales 190.5 -6.0% 195.2 -9.5% 189.0 -6.7% 228.4 -3.7% 803.0 -6.4%
AOI 7.7 1.6 8.4 -7.1 11.8 -2.0 26.1 2.5 54.0 -4.9
Margin in % 4.0% 1.1pts 4.3% -2.8pts 6.2% -0.6pts 11.4% +1.4pts 6.7% -0.1pts
Sales 0.1 - 0.1 - 0.2 - 0.0 - 0.5 -
AOI -3.0 2.9 -2.8 1.1 -1.6 3.3 -5.8 -4.2 -13.3 3.1
Sales 360.5 0.9% 361.2 -3.7% 355.3 -2.3% 406.8 -1.8% 1,483.8 -1.7%
AOI 32.1 4.8 26.8 -17.1 42.2 -5.5 54.2 -14.5 155.3 -32.3
Margin in % 8.9% 1.4pts 7.4% -4.0pts 11.9% -1.0pts 13.3% -2.9pts 10.5% -1.7pts
Q3 2016 2016
Actual Actual Actual
Q4 2016Q1 2016 Q2 2016
Consumer
Choices
Consumer
Experiences
Other
Group
FY 2016
quarter viewin m€ Actual Actual
28© GfK 2017 | Analyst call | March 14, 2017
71
346 334 360 372 374
119
573
445 413 402
269
2004 2012 2013 2014 2015 2016
CC
CE
Goodwill
in m€
774
643
GfK´s strategy, the changing market environment
and the effect on goodwill
• Focus on acquisitions to achieve a global footprint
• Strong growth of market research industry
• Competitive M&A environment drove high multiples
• Strong increase of goodwill
• GfK managed as “Holding” company with independent local entities
"Internationalization“ of GfK – pre 2012
• New strategy focusing on organic growth. Selective, technology driven
acquisitions
• Decelerated growth, price pressure and commoditization in Custom
Research market
• Impairment test based on current market conditions and the new
GfK business model
• Goodwill impairment is cash neutral and therefore has no effect on
investments and future business success
• The impairment 2016 resulted essentially from adjusted growth
prospects in nearly all regions in sector CE (except for CEE/META)
"Globalization and Integration" of GfK – since 2012
Pre new
strategy
Post new strategy
919
779 773
190
CE
goodwill
impairment
-113
Group:
FX effect
-29
Goodwill impairment in Balance sheet Dec. 31, 2016: 137.0 m€, FX rate as of December 31, 2016;
Goodwill impairment in Income Statement 2016: 136.9 m€, average FX rate (12 months 2016)
CE
goodwill
impairment
-63
Group:
FX effect
+53
CE
goodwill
impairment
-40
Group:
FX effect
+45
CE
goodwill
impairment
-137
Group:
FX effect
-23
45.6 41.3 39.1 39.9 39.1 31.3
Equity
ratio
in %
29© GfK 2017 | Analyst call | March 14, 2017
Net Debt in 2016 below 2015
Net debt to EBITDA (IFRS) at 2.08 – stable investment grade
2013 2014 2015 2016
CAPEX in m€ -80 -89 -94 -71
Net M&A in m€
(after divesture of assets)-38 -10 -43 -4
Net Debt IFRS in m€ -428 -393 -400 -382
Net Debt/EBITDA IFRS 1.90 1.94 1.73 2.08
IFRS Net Debt
EBITDA
428393 400 382
225202
231183