Bertelsmann Further Improves Operating Results in First Half 2003
In the first half of 2003, Bertelsmann continued the progress it made in the previous year and further improved its operating profit. Operating EBITA reached EURO 228 million, topping the EURO 175 million achieved for the first half of 2002 by 30 percent. The major reasons for this improvement in results were decreased losses at Direct Group, positive performance at RTL Group and the group-wide optimization of business processes and cost structures. Lower consumer demand reduced results at Random House and BMG.
At EURO 7.9 billion, revenues were below the previous year ( EURO 8.8 billion). The decrease was affected by a weak US dollar as well as the overall state of the global economy. Media markets in which Bertelsmann has a significant presence were affected by lower consumer demand, particularly in the US. Adjusted for exchange rate effects, acquisitions and disposals, revenues declined by 3.1 percent compared with the first half of 2002. The change in revenues was also induced by the divisions' intensified focus on their core businesses. Sales levels were also influenced by the timing of new releases in the music and book publishing divisions, which will be tilted more strongly towards the second half of the year in 2003 than they were in 2002.
Net income for the first half of the year was EURO 142 million (previous year, mainly due to the sale of shares in AOL Europe: EURO 1.6 billion). Special items of EURO -53 million in the first half of 2003 were mainly expenditures for integrating the Zomba music company into BMG and for restructuring within the music division.
Bertelsmann Chairman and CEO Gunter Thielen stated:
"Bertelsmann has further improved the results of its operating businesses in the first half of 2003. This confirms our focus on strengthening core businesses and improving earnings potential. Based on the seasonal nature of many Bertelsmann businesses, we expect higher revenues and a higher operating profit for the second half of the year than during the first half. We are keeping our forecast of achieving an Operating EBITA for the whole of 2003 that exceeds previous-year levels."
Bertelsmann CFO and Deputy Chairman Siegfried Luther stated:
"Bertelsmann has further improved the structure of its financing instruments and resolutely continued its focus on the capital market. Once we are in receipt of the proceeds from the Bertelsmann Springer sale, we again will achieve our self-imposed financing goals."
Other key financials
Investments for the first half of 2003 totaled EURO 342 million (previous year: EURO 2.1 billion), mainly relating to the acquisition of program rights (RTL Group) as well as replacement and expansion projects (Arvato, Gruner + Jahr). The amount for the first half of 2002 included in particular the purchase of a further 22 percent of RTL Group for EURO 1.5 billion .
Net financial debt amounted to EURO 2.6 billion on June 30, 2003 and will decrease by the end of the year following receipt of the proceeds from the sale of Bertelsmann Springer. In May 2003, Bertelsmann sold the specialist-publishing group Bertelsmann Springer to a syndicate made up of the private equity firms Cinven and Candover effective April 1, 2003. The purchase price, free of debt, amounts to EURO 1.05 billion. The deal is scheduled to close in mid-September. A capital gain of EURO 630 million was recorded in the first half of 2003.
Divisions
RTL Group
(Revenues: EURO 2.2 billion, Operating EBITA: EURO 250 million) continued to build on the positive progress it made in 2002. Despite the ongoing difficulties in advertising markets, particularly in Germany, the Group was able to grow against the overall industry trend and recorded a clear increase in profit. RTL Television in Germany contributed significantly to this performance and attained its best audience levels since 1997 with innovative program formats such as "Deutschland sucht den Superstar", the German adaptation of "Pop Idol", and the "70's" and "80's" shows. FremantleMedia's success around the world with "Pop Idol", together with M6's satisfactory performance in France and Five's breakeven in the UK, also contributed to this performance. At the same time rigorous savings ensured that cost structures were tightened across the Group.
The majority of the six-month Random House
(Revenues: EURO 747 million, Operating EBITA: EURO 29 million) revenue decline from prior year was due to the weakness of the U.S. dollar. Random House was also significantly impacted by weak consumer demand in the U.S. and Germany and by the closure of several German publishing imprints, including the how-to book publishers Falken and Mosaik. The decrease of revenues was partially offset by such major bestsellers as The Da Vinci Code" by Dan Brown and The King of Torts by John Grisham as well as by the audiobook for J. K. Rowling's fifth "Harry Potter" novel. Achievements in ongoing cost savings and a solid performance from Random House's U.K. group also helped offset Random House's revenue decline.
Despite difficult market conditions, Gruner + Jahr
(Revenues: EURO 1.2 billion, Operating EBITA: EURO 112 million) was able to maintain its operating results at the same level as for the first half of 2002, and even improve return on revenues over the first six months of the previous year. The decrease in revenues compared with the first half of 2002 was due to soft advertising volumes driven by the weakness of the economy as well as to the disposal of newspaper activities. Extensive investments in innovative magazines, such as Woman and Neon in Germany, Shopping in France and Glamour in Poland strengthened Gruner + Jahr's portfolio in its core business as well as its position in growing markets. With steadily growing circulation and readership, the "Financial Times Deutschland" is Germany's fastest-growing nationwide daily.
BMG
's business (Revenues: EURO 1.0 billion, Operating EBITA: EURO -117 million) was considerably influenced by the continuing decline in the global music market. Major new releases were pushed back into the second half of the year. The resulting drop in revenues was partly offset by the first-time inclusion of Zomba. Profits were also affected by artist advance write-offs. However, BMG achieved major artistic successes and improved its market position in several areas. Artists such as R. Kelly, Avril Lavigne, "American Idol" finalist Kelly Clarkson, Justin Timberlake and Christina Aguilera were among the top sellers in North America, where BMG had No. 1 debuts from Monica and Luther Vandross. The new release from Annie Lennox debuted at No. 3 in the UK, while BMG was market leader in Germany with "Deutschland sucht den Superstar." Italy's Eros Ramazzotti reached top 10 in 10 territories.
The media services provider Arvato
(Revenues: 1.6 billion EURO , Operating EBITA: 54 million EURO ) withstood difficult conditions in its core markets and was able to increase its Operating EBITA. In addition to the overall, continuing weak state of the economy, the slight decline in revenues was mainly due to the weakness of the U.S. dollar. While Arvato Print's printing business was confronted with increased pricing pressure, Arvato Services raised both revenues and profits. Arvato Storage Media held up well in a globally shrinking CD market. Sales volumes in the DVD segment rose sharply over the first half of 2002.
The decline in revenues at Direct Group
(Revenues: EURO 1.1 billion, Operating EBITA: EURO -17 million) is due to the withdrawal from pure e-commerce with media products, the focus on book and music clubs, the change in new member strategy for the US music club and currency effects relating to the U.S. dollar and British pound. By focusing on its core business and rigorously pursuing cost reductions in all areas of its operations, Direct Group was able to almost entirely eliminate its losses. The profitable club activities were further expanded, particularly in Spain and France. The clubs in Germany and Great Britain are making significant progress. The U.S. music club, BeMusic made a positive contribution to profits and was able to resist the overall trend on the music market.
Overview of Figures ( EURO in millions)
| Group | Jan 1 - Jun 30, 2003 |
Jan 1 - Jun 30, 2002 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
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| Total assets Equity (incl. Minority interests) Net financial debt No. of employees | 20,894 7,505 2,637 73,973 | 22,188 7,744 2,741 80,632 |
* Including amortization of goodwill from associated companies
| Division | Revenues | Operating EBITA | ||
| 1/1/ - 6/30/03 | 1/1/ - 6/30/02 | 1/1/ - 6/30/03 | 1/1/ - 6/30/02 | |
| RTL Group | 2,212 | 2,102 | 250 | 173 |
| Random House | 747 | 1,010 | 29 | 68 |
| Gruner + Jahr | 1,240 | 1,443 | 112 | 121 |
| BMG | 1,086 | 1,166 | -117 | -45 |
| Arvato | 1,639 | 1,672 | 54 | 44 |
| Direct Group | 1,134 | 1,374 | -17 | -119 |
| TOTAL SEGMENTS | 8,058 | 8,767 | 311 | 242 |
| Bertelsmann Springer | 158 | 359 | 0 | 26 |
| Intercompany Revenues | -333 | -296 | ||
| REVENUES | 7,883 | 8,830 | ||
| Corporate/Consolidation | -83 | -93 | ||
| OPERATING EBITA | 228 | 175 |
About Bertelsmann AG:
The Bertelsmann media and entertainment company commands leading positions in major markets all over the world. Its core business is the creation of first-class media content: The group incorporates Europe's No.1 in television and radio, the RTL Group, as well as the world's biggest book publisher Random House, comprised of over 100 individual publishing companies. Europe's biggest magazine publisher Gruner + Jahr and the BMG music company with its about 200 labels stand for creativity and powerful brands. Direct Group bundles Bertelsmann's direct-to-customer businesses: book and music clubs with a worldwide membership of more than 40 million. The international media services provider Arvato includes expanding distribution companies, service centers and customer loyalty systems, along with state-of-the-art printing plants, storage media production and comprehensive IT services.
For further questions, please contact:
Oliver Herrgesell
Senior Vice President Media Relations
Phone: + 49 - 5241 - 80-24 66
oliver.herrgesell@bertelsmann.comThis press release and a detailed interim report may be viewed on the Internet at: http://www.bertelsmann.com/news/interimreport/interimreport.cfm.
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| BAG_Halfyear_2003.pdf | 113 kB |
