Business News

Bertelsmann raises its forecast for 2010 after first-half leap in profits

Tuesday 31. August 2010 - Group turnover rises to €7.4 billion; Operating EBIT soars to record €755 million; Group result improved by more than half-billion Euros; 2010 Revenues and Operating EBIT expected to rise above previous year; Group result for the full year to exceed € 500 million

The international media group Bertelsmann reports a surge in profits during the first six months of the year 2010. Against the backdrop of an upturn in Europe’s advertising markets and the long-view cost-cutting measures of the previous year, operating EBIT from continued operations rose to €755 million for the period from January to June (H1 2009: €497 million), a new record. The Group improved its result by more than half- billion Euros, for a net profit of €246 million (H1 2009: €-333 million). Group turnover, now adjusted for the British TV channel Five which has since been sold, amounted to €7.4 billion for the first six months of the year (H1 2009: 7.1 billion €); Return on Sales increased to 10.3 percent (H1 2009: 7.0 percent).
“I am very pleased that business is going so remarkably well in the year of our 175th anniversary. Our operating result has achieved a record high. The economy and especially the advertising markets are friendlier. We now are profiting from having expanded our market-leading positions, while also having lastingly improved our cost structures. This makes us confident for the rest of the year, and that is why we are raising our profit forecast,” declared Bertelsmann’s Chairman & CEO Hartmut Ostrowski. “We are well equipped for the future and will systematically continue to develop our many different businesses. The entire field of digitization will play an increasingly important role.”
Growth was mainly fueled by the advertising-driven divisions, RTL Group and Gruner + Jahr, and by Random House where the U.S. business and digital activities have shown particularly positive development. At RTL Group, all units played a part in boosting profits, and especially Mediengruppe RTL Deutschland, Groupe M6 in France, and RTL Nederland. Gruner + Jahr benefited from an improved advertising environment and has gained market share. Arvato did well, as its services business thrived and the print sector made a recovery, while Direct Group continued to adjust its portfolio during the period under review. The savings from the previous year’s costs program contributed significantly to the positive performance across all of Bertelsmann’s companies and divisions.
The first half of the year also saw strong operating free cash flow from operations. Debt was further reduced: at the reporting date of June 30, 2010, net financial debt was €2.78 billion (December 31, 2009: €2.79 billion). Bertelsmann has significantly reduced its debt by more than €800 million in the past twelve months. At 2.8, the Leverage Factor remains below the mark of 3.0. In relation to net financial debt, the factor was 1.2.
“Bertelsmann is financially solid. After the measures taken during the previous year, there was no need for adjustments to the first-half balance sheet,” explained Bertelsmann’s CFO Thomas Rabe. “We are raising our forecast for the full year. Instead of the stable revenue and operating EBIT performance predicted at the Annual Press Conference in March, we now expect to see a year-on-year increase in both, and a Return on Sales of around 10 percent. We are increasing the predicted Group result corridor of between €400 and €500 million to over € 500 million. Nonetheless, visibility for the important fourth quarter still remains low in the advertising markets.”
On June 30, 2010, Bertelsmann had 100,151 employees worldwide (December 31, 2009: 102,704).