Business News

Bertelsmann significantly increases first-half revenues and Group result

Friday 31. August 2012 - Group revenues increase to €7.6 billion

Operating EBIT again at high level, at €731 million
Group result up more than 30 percent to €353 million
Progress in long-term reshaping of the Group
The international media company Bertelsmann saw a major increase in its revenues during the first half of 2012. Operating EBIT once again reached a high level, and the Group result improved significantly.
Group revenues from continuing operations increased by 5.0 percent to €7.6 billion, after €7.2 billion for the corresponding period last year. Almost all divisions contributed to the increase in revenues. Excluding portfolio and currency effects, growth was 3.7 percent. At €731 million, operating EBIT from continuing operations almost reached the prior year’s high level. Return on sales came to 9.7 percent (H1 2011: 10.3 percent). Group profit improved significantly by €84 million or 31 percent, to €353 million (H1 2011: €269 million). The main reasons for this are the record operating profits at the Random House book publishing group, a lower negative impact from special items, and the absence of negative earnings from discontinued operations. Bertelsmann Value Added (BVA), which measures the profit realized above and beyond the cost of capital, reached €90 million in the first half of the year (H1 2011: €87 million).
Bertelsmann CEO Thomas Rabe said: “In sum, developments during the first half were positive overall. I am particularly pleased that Bertelsmann is growing significantly, and mainly organically. We want to accelerate this momentum with our four strategic approaches, to gradually reshape Bertelsmann over the next few years. The first of these strategic thrusts is strengthening our core businesses; second the transformation to digital of our businesses; third the development and expansion of growth platforms; and fourth expansion into growth regions, especially in Asia and South America. We have made good progress in the past few months. For example, we have made a number of promising investments in our new line of business, education, and expanded our position in the growth regions, supported by the opening of new Corporate Centers in India and Brazil.”
During the reporting period RTL Group especially benefited from brisk business in Germany, and Random House from rising e-book revenues as well as powerful bestsellers like the record-breaking “Fifty Shades” trilogy. The magazine publisher Gruner + Jahr kept revenues stable during the reporting period despite a substantial decline in the ad sales markets; it also expanded in its growth field of digital marketing. Arvato notably increased revenues again during the reporting period, and the merger of gravure and international offset operations into a separate print unit at the beginning of the year increased their profitability.
Corporate Investments, which include the music rights company BMG and the University Ventures Fund launched with other prominent investors, reported an overall increase in revenues and a lower operating loss.
Bertelsmann CEO Thomas Rabe added: “For the current year we continue to expect moderate revenue growth, a continued high operating EBIT, and a year-on-year increase in net profit. However, the subdued economic prospects and the euro crisis, whose repercussions are challenging to gauge, making it difficult to predict future developments at this time.”
On 30 June, 2012 Bertelsmann had 103,768 employees worldwide (31 December, 2011: 102,752).
Divisions:
RTL Group
Highlights ·
Mediengruppe RTL Deutschland launches new free-to-air TV channel RTL Nitro,
The European soccer championship was a crowd-puller for the French channel M6:
RTL Group’s various online platforms generated more than 1.2 billion video views in
The leading European entertainment network increased its revenues in a difficult economic environment, often in declining advertising markets, to a solid €2.8 billion (H1 2011: €2.8 billion). Against this backdrop, RTL Group’s operating EBIT, at €498 million, did not reach the record result seen in the previous year (€545 million). Revenues were up especially at Mediengruppe RTL Deutschland and the content arm Fremantle Media. The German TV advertising market was the only one to show slight growth during the reporting period; the remaining advertising markets declined, particularly in Southern and Eastern Europe. The German RTL channels also improved their operating profit. However, the decline in advertising revenues in most other countries, along with pressure on margins for Fremantle Media and portfolio effects, led to a lower overall operating EBIT. RTL Group maintained its leading audience positions in its key countries, even though the popular live broadcasts of the European soccer championship were broadcast by the competition in nearly every country. In the German TV market, RTL Television was again the clear number one among young viewers. In France, M6 was once again the only major general-interest channel to gain audience share. A new channel launched in Germany, RTL Nitro, is rapidly attaining good market share. RTL Group’s online platforms and mobile applications continued to show dynamic growth. In addition, the Group’s channels launched a number of new digital offerings that complement the linear TV program with background information and social media options (“second screen”).
Random House
Highlights
Outstanding Random House revenue and profit increases
E L James’ “Fifty Shades” trilogy sells more than 30 million copies March-June
E-book sales continue to grow significantly in all territories
The world’s largest trade publishing group generated record half-year revenues and operating results, driven by the strength of its many bestsellers and continued growth in e-book sales. Favorable currency exchange rates also contributed to its positive performance. Revenues grew to €947 million (H1 2011: €787 million), and operating EBIT increased significantly to €113 million (H1 2011: €69 million). Random House had spectacular publishing success with the record-breaking “Fifty Shades” trilogy by E L James. Its English-language imprints sold more than 30 million copies between March and June, with sales evenly divided between the trade paperback and e-book editions. In the United States, Random House placed 155 titles on the national New York Times bestseller lists. As well as the “Fifty Shades” titles, these included: “Calico Joe” by John Grisham, “Gone Girl” by Gillian Flynn, “The Lorax” by Dr. Seuss, and George R. R. Martin’s “A Song of Ice and Fire” fantasy series. The Random House Group UK commanded a 22 percent share of the overall Sunday Times bestseller lists. In Germany, Verlagsgruppe Random House further improved its market-leading position thanks to a strong publishing portfolio. Despite the challenging economic environment in Spain, Random House Mondadori benefited from an increase in Latin American sales revenue. Random House publishers worldwide expanded their e-book programs to nearly 42,000 titles and substantially increased its digital-publishing offerings. The US publishing group launched the author portal, which provides its authors with real-time information about their sales figures, royalties, and licensing deals, as well as social-media tools for connecting to their readers.
Gruner + Jahr
Highlights
Entry into the digital marketing business in India through acquisition of a majority stake in Networkplay India Ltd.
Successful launch of “Neon” in France and “Vogue” in Holland
New apps from “Geomini,” “P.M. History,” “P.M. Magazin,” “Gala Starfinder,” Kino.de,
Europe’s leading magazine publisher kept revenues stable during the reporting period, while its operating result decreased significantly. Revenues for the first six months came to €1.1 billion (H1 2011: €1.1 billion); operating EBIT was €85 million after €124 million in the prior year. The earnings trend is due mainly to a significant decline in advertising markets for consumer magazines in Germany and other European countries. Also, factors including increased investment in the accelerated digital transformation of the content and marketing ranges as well as in the global “House of Content” digital project had a negative impact on earnings. In Germany, circulation revenues remained almost stable, thanks in part to successful launches of new titles and line extensions. Revenues in the strategic growth field of digital marketing increased significantly, due in particular to the continuing internationalization of the EMS subsidiaries Ligatus and Adyard. The international business continued to show a mixed performance. France, Spain, and Austria were unable to maintain the prior year’s revenue and earnings levels due to weak advertising markets. By contrast, the businesses in the Netherlands, China, and India continued to record strong revenue growth. The United States company Brown Printing increased its revenues and earnings during the reporting period. Dresdner Druck- und Verlagshaus exceeded its excellent prior-year revenue performance, and profits remained stable at a high level.
Arvato
Highlights
High double-digit growth in China with customer relationship management and supply chain management
Expansion of e-commerce businesses in the European core markets
Expansion of the product portfolio for customers in the energy and utilities sector through acquisition of Perdata Gesellschaft für Informationsverarbeitung mbH
The business process outsourcing (BPO) provider Arvato increased its first-half revenues considerably to €2.1 billion (H1 2011: €2.0 billion). Operating EBIT rose slightly to €83 million after €80 million in the first half of the prior year. In order to focus Arvato on high-growth services, the European gravure operations and the international printers were grouped into a separate business unit outside the division with retroactive effect from January 1. The figures have been adjusted accordingly, including those for the prior year. In its new alignment, Arvato continues to take the strategic approach of providing integrated services to help large companies successfully develop their customer relationships. Major growth drivers in the first half of the year included Arvato Infoscore’s integrated financial services based around risk management and collection; the BPO services in the European core markets of Germany, France, UK, and Spain; the international supply chain management business in the IT/high-tech segment; and service businesses in the growth market of China. As anticipated, the worldwide revenues from replication that Arvato realizes with clients in the entertainment industry declined further during the reporting period.
Print
Highlights ·
Bertram Stausberg takes over management of both the printing unit and Prinovis
Prinovis enters into technology partnership with Siemens for programming
New digital printing press for OPM completes the range of technical print productsand opens up new sales opportunities
The European gravure operations and international printers hived off from Arvato with retroactive effect from January 1 achieved slightly lower first-half revenues of €562 million during the reporting period, after €573 million in the prior year. Thanks primarily to cost effects, operating EBIT surged to €20 million (H1 2011: €14 million). The gravure company Prinovis recorded positive sales performance and significant progress in cost management. The company developed new products and services in a market which remained tight. In the United States, Coral Graphics increased earnings; the companies there signed new contracts with major customers. The concentration of machinery and personnel of the United States business at the Berryville site should ensure future positive effects on costs. A new management structure designed to create synergies and sales advantages was introduced for the Southern European operations, which faced a challenging market environment.
Corporate Investments/Corporate Center
Highlights
Bertelsmann enters the growth market of education via the University Ventures Fund
New Corporate Centers opened in New Delhi and São Paulo
Funds expand investments in digital businesses and the Asian region
In the first half of the year, Corporate Investments reported revenues of €227 million (H1 2011: €214 million) and a reduced operating loss of €-27 million (H1 2011: €-58 million). This still reflects start-up losses for the building of new businesses. The music rights company BMG integrated Bug Music, the music publisher it acquired last year. In addition, it also bought up two new publishers with R2M Music and Dreyfuss Music, while also signing additional international artists. The company has been provided with additional capital. Bertelsmann joined other prominent investors in setting up the University Ventures Fund to initiate innovative higher education programs in Europe and the United States in partnership with leading universities. Several investments were made, including one in an online university in the United States. The BDMI fund for global digital investments and the BAI fund for investments in promising Asian companies acquired new holdings. At the direct-selling company Inmediaone, the first half was dominated by a strategic realignment and restructuring measures. The club and direct marketing businesses recorded further revenue declines but maintained nearly stable results. The Eastern European subsidiaries will remain in the company and were reclassified as continuing operations. The focus at the Corporate Center was on the strategic process initiated by the new Bertelsmann management team under Thomas Rabe, as well as on setting up a new central department for business development and new businesses, and the change of legal form to a Kommanditgesellschaft auf Aktien (KGaA; partnership limited by shares). Bertelsmann opened new Corporate Centers in New Delhi and São Paulo, Brazil, to accelerate the expansion of business there.
Overview of figures (in € millions)


January 1, 2012 – June 30, 2012
January 1, 2011 – June 30, 2011
Group revenues (from continuing operations)
7,572
7,209
Operating EBIT by division
Corporate Center
Consolidation
Operating EBIT (from continuing operations)
772
(43)
2
731
774
(33)
(2)
739
Special items
(19)
(60)
EBIT (earnings before interest and tax)
712
679
Financial result
(198)
(195)
Earnings before taxes from continuing operations
514
484
Income taxes
(160)
(109)
Earnings after taxes from continuing operations
354
375
Earnings after taxes from discontinued operations
(1)
(106)
Group profit or loss
353
269
There of: Earnings attributable to Bertelsmann shareholders
279
183
There of: Earnings attributable to non-controlling interests
74
86

Investments
299
352


Balance as of
June 30,
2012
Balance as of
December 31,
2011
Net financial debt
1,987
1,809
Economic debt *
5,475
4,913
Employees (headcount)
(from continuing operations)
103,768
102,752
The corresponding figures for the previous period have been adjusted in accordance with IFRS 5.
*Net financial debt plus provisions for pensions, profit participation capital and present value of operating leases (continuing operations).
Division*
Revenues
Operating EBIT

January 1, –
June 30, 2012
January 1, – June 30, 2011
January 1, – June 30, 2012
January 1, – June 30, 2011
RTL Group
Random House
Gruner + Jahr
Arvato
Print
Corporate Investments
Total Divisions
Corporate Center
Consolidation
Total Group
2,819
947
1,111
2,090
562
227
7,756
–
(184)
7,572
2,751
787
1,113
1,954
573
214
7,392
–
(183)
7,209
498
113
85
83
20
(27)
772
(43)
2
731
545
69
124
80
14
(58)
774
(33)
(2)
739
* continuing operations