Annual Results GfK SE Analyst Call. March 14, GfK 2017 Analyst call March 14, 2017

Transcription

1 Annual Results 2016 GfK SE Analyst Call March 14,

2 2016: Setting the course in a challenging year Gerhard Hausruckinger Speaker of the Management Board and CCO GfK SE March 14,

3 2016: Setting the course in a challenging year 1 st half of nd half of 2016 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 3

4 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 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 4

5 Key figures for 2016 Growth Sales 1,484 m (2015: 1,543 m ) Organic growth -1.7% Overall growth due to currency effects -3.9% Income Cash Flow & Investment Adjusted operating income of m (2015: m ) Margin of 10.5% (2015: 12.2%) Consolidated total income 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 m (2015: m ) Investments amounting to 102 m (2015: 137 m ) 5

6 GfK and Peers Sales growth in % for FY 2016 Data Investment Management n/a 2.2 n/a Ipsos does not report growth at constant FX rates Nielsen does not report organic growth -0.9 Total Organic At constant currency 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 6

7 2016: Key figures of the financial year Christian Diedrich CFO GfK SE March 14,

8 GfK Group full year results Y/Y decline in revenue, AOI and margin FY 2016 Sales Growth rate in % AOI Margin in % D D Actual Total Organic Inorganic FX effect Actual Actual in m 2016 vs vs 2015 Consumer Choices % 4.1% -3.5% -0.7% % -4.5pts Consumer Experiences % -6.4% 2.2% -2.3% % -0.1pts Other Group 1, % -1.7% -0.5% -1.6% % -1.7pts 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 8

9 3 out of 6 regions growing organically Strong organic growth in Latin America and CEE/META offset by decline in North America and Europe Sales 2016 in m North America 290 m Northern Europe 537 m CEE/META 128 m 62 9M Q4 FY 9M Q4 FY 9M Q4 FY 2 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% 9

10 GfK Group AOI Margin Bridge FY 2016 AOI margin compared to FY 2015 (in pts) Media Measurement POS business Acquisitions/ Divestitures CE revenue deterioration Restructuring/ Utilization Mix/Other

11 GfK Group Staff Development 13, , Productivity and capacity management Scope of consolidation and GSC YE 2015 Sector CC Sector CE Acquisition/ Divestment GSC ramp-up and Other YE

12 GfK Group: Consolidated income statement In m vs Changes in % Sales 1, , Gross income from sales SGA expenses Other operating expenses (net) Highlighted items Adjusted operating income AOI Margin 12.2% 10.5% -1.7pts Highlighted items Operating income Income from participations EBIT EBIT Margin 6.9% -3.4% -10.3pts EBITDA EBITDA Margin 15.0% 12.3% -2.7pts. Financial result Income before tax Tax on income Tax rate 53.7% % - Consolidated total income Earnings per share in % organic growth -1.6% currency effect -0.5% from acquisitions/divestments Incl m goodwill impairment Interest expenses and FX effect improved Tax rate distorted by goodwill impairment which has no tax impact 12

13 GfK Group: Highlighted items In m Goodwill impairment *) Sector CE; all regions affected except for CEE/META Write-ups and write-downs of additional assets identified on acquisitions Income and expenses in connection with share and asset deals Income and expenses in connection with reorganization and improvement projects Reassessment of growth prospects in sector CE Mainly severance payments Personnel expenses for share-based incentive payments Including impact of KKR transaction Currency conversion differences Expenses from litigation, compliance cases and terminated projects Remaining highlighted items Including impact of provisions for Media Measurement risks. 2015: Mainly write-down on Mobile Insight / Location Insight and CPIMS/NEO Total highlighted items *) goodwill impairment reflected in the balance sheet: m (average FX rates vs. spot rates) 13

14 GfK Group: Consolidated balance sheet Assets in m Dec. 31, 2015 Dec. 31, 2016 Change in m Share 2016 in % Goodwill Change includes goodwill impairment Other non-current assets Non-current assets 1, , Trade receivables Other current assets Assets held for sale Current assets Assets 1, , Increase mainly in bank balances 2015: Mainly 'Crop Protection and Animal Health Business' 2016: Real estate Switzerland Equity and liabilities in m Dec. 31, 2015 Dec. 31, 2016 Change in m Share 2016 in % Equity Non-current financial liabilities Other non-current liabilities Non-current liabilities Operating liabilities Change includes goodwill impairment, dividend payments and currency effects Change includes repayment and refinancing of bond Other current liabilities Liabilities held for sale Current liabilities Equity and liabilities 1, ,

15 GfK Group: Cash flow In m vs Changes in m Consolidated total income Amortization (incl. reversal) Incl m goodwill impairment Changes in inventories, receivables, payables Others Interest result Taxes paid Improvement in non-operating working capital (2015: Turkey fraud payments) and higher deferred tax expense (=non-cash) Increase in current tax expense has translated into higher tax payments year to date Cash flow from operating activity CAPEX Reduced investments in panel set-up and software Acquisitions, other financial investments and asset disposals Free cash flow after acquisitions, other investments and asset disposals Includes balance of Netquest acquisition and divestiture of Crop Protection and Animal Health Business Cash flow from financing activity

16 Maturity profile of financial debt significantly improved vs. prior years In m < 3Y 62% 52% 25% 3-5Y 6% 34% 41% > 5Y 32% 14% 34% Total bank debt (gross) Funding structure in % Schuldschein floating Bank loans Schuldschein fix Bond Balanced Profile 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 Total bank debt (net) RCF/Credit Lines Ø YE Total Interest 3.97% 3.23% 1.52% 16

17 GfK Group Investments 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 Replacement Financial Investment and NPD deal (2015) * Includes effect of unbundling of cross shareholding with The NPD Group. 17

18 GfK Group Amortization/Depreciation In m In 2016 increasing amortization/depreciation in Consumer Choices due to Audience Measurement projects StarTrack/Neo investment of the past AutoCat ramp-down 20 0 OT CC CE 18

19 Reduction of complexity continued Number of legal entities % 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 reduced to 172 Expansion Reduction Entities as at Dec 31 st 19

20 2017: New momentum for a successful future of GfK Gerhard Hausruckinger Speaker of the Management Board and CCO GfK SE March 14,

21 Guidance 2017 Guidance 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 Sales Coverage 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. 21

22 Voluntary takeover offer by KKR GfK s Management and Supervisory Boards support offer KKR announces (Dec. 30, 2016) voluntary takeover offer (Dec. 8, 2016) All completion conditions satisfied (March 2, 2017) Future shareholder structure : 85.85% GfK Verein and Acceleratio 14.15% Freefloat New momentum for a successful future of GfK Offer price of per share; GfK Verein supports offer (Dec. 21, 2016) Shareholding quota of tender amounts to 19.33% at expiry of acceptance period (March 1, 2017) Additional 10.06% of the share capital to be attributed to Acceleratio (March 2, 2017) KKR s engagement is promising due to Market research industry know how International network Track record of successful investments 22

23 New CEO as of March 15: Peter Feld Most recently: CEO of WMF Group Before: Member of Management Board of Beiersdorf Previous companies: Johnson & Johnson, Procter & Gamble Peter Feld 23

24 Q&A 24

25 Appendix 25

26 GfK Group single Q Y/Y decline in revenue, AOI and margin Single Q in m Consumer Choices Consumer Experiences Sales Growth rate in % AOI Margin in % Actual Total Organic Inorganic FX effect D Q vs Q D Q vs Q % 0.7% -5.7% -0.2% % -5.9pts % -3.7% 2.2% -1.6% % 1.4pts Other Group % -1.8% -1.5% -1.0% % -2.9pts Actual Actual 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 26

27 GfK Group full year results per quarter per sector Organic sales development Consumer Choices FY 2016 Q Q Q Q quarter view D D D D D in m Actual Actual Actual Actual Actual Consumer Experiences Other 2016 vs vs vs vs vs 2015 Sales % % % % % AOI Margin in % 16.2% -1.1pts 12.8% -6.5pts 19.3% -3.7pts 19.0% -5.9pts 16.8% -4.5pts Sales % % % % % AOI Margin in % 4.0% 1.1pts 4.3% -2.8pts 6.2% -0.6pts 11.4% +1.4pts 6.7% -0.1pts Sales AOI Sales % % % % 1, % Group AOI Margin in % 8.9% 1.4pts 7.4% -4.0pts 11.9% -1.0pts 13.3% -2.9pts 10.5% -1.7pts 27

28 GfK s strategy, the changing market environment and the effect on goodwill Goodwill in m CC CE goodwill CE Pre new strategy 919 CE goodwill impairment -113 Group: FX effect Post new strategy Goodwill impairment in Balance sheet Dec. 31, 2016: m, FX rate as of December 31, 2016; Goodwill impairment in Income Statement 2016: m, average FX rate (12 months 2016) CE impairment -63 Group: FX effect +53 goodwill impairment -40 Group: FX effect +45 CE goodwill impairment -137 Group: FX effect Equity ratio in % "Internationalization of GfK pre 2012 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 "Globalization and Integration" of GfK since 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) 28

29 Net Debt in 2016 below 2015 Net debt to EBITDA (IFRS) at 2.08 stable investment grade IFRS Net Debt EBITDA CAPEX in m Net M&A in m (after divesture of assets) Net Debt IFRS in m Net Debt/EBITDA IFRS