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TNS Trading Update
Global agency Taylor Nelson Sofres has issued a trading update ahead of its preliminary results announcement on March 18 this year. The group expects its underlying improvement in 2001 to be slightly ahead of market growth, which is generally estimated to be 5%.
Year on year improvement was achieved in all sectors, with excellent trading in Healthcare compensating for a downturn in the second half in IT/Telecoms. 2001 was another year in which the group played an active part in industry consolidation, making a number of acquisitions, of which three were announced in the second half. The group has continued to work on improving its operating margin. Its press and broadcast monitoring activities, however, have been impacted over the past few months by the dominance of a single news story. In addition, Omnibus and focus group services saw reduced demand in the aftermath of September's terrorist attacks. While these are both short-term factors, they affected some of the group's higher margin activities, holding back overall margin improvement to below the previously anticipated 0.5% level.
Turnover increased in all of the group's regions, with Europe reporting an underlying improvement ahead of the market. Although the UK and France were impacted by the continued under-performance of the group's small non-market information activities, the rest of Europe achieved double-digit growth.
The Americas region as a whole saw turnover growth. TNS Intersearch, in particular, had a good year; operating in a market that is thought to have shown little or no increase for the year as a whole, its underlying turnover was up by over 4%. New York-based CMR was affected by weakness in the U.S. media sector generally but the company continued to deliver turnover improvement. The economic uncertainty in Argentina has resulted in a decline in sales and this, together with the recent devaluation, has led to a review of the value of the group's investment. It is anticipated, therefore, that an additional charge of approximately £1.5 million will be made to the profit and loss account in respect of goodwill.
Asia Pacific reported particularly strong performances in Korea and Taiwan. The group is entering into a new strategic alliance in Japan, which is expected to lead to increased activity in that market. However, 2001 was affected by the termination of the group's existing partnership in Japan.
Interest cover increased in the second half of the year, due both to improved operating cash flow and falling interest rates. The group remains committed to an ongoing policy of investing in new services and products. In 2001, approximately 3% of turnover was invested into new developments and the group plans to maintain a similar level of investment in 2002. In this way it expects to continue to achieve out performance of a growing market.
In summary, Chief Executive, Mike Kirkham noted, 'In 2001, the group performed well against a difficult economic backdrop, proving the resilience we gain from our global network and wide sector spread of activities. It was a year in which our expertise was recognised by UK Marketing magazine, which chose Taylor Nelson Sofres as Market Research Agency of the Year. As the fundamental drivers for industry growth remain robust, our market still continues to increase and we expect to achieve anticipated levels of turnover improvement in 2002.'
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