Bertelsmann Continues to Grow its Revenues and Earnings

  • Revenues grow by 2.7 percent to €12.3 billion during first nine months of 2005
  • Operating result up considerably by 11.7 percent to €907 million
  • Number of employees increases significantly

During the first nine months of 2005, Bertelsmann increased both its revenues and its operating result, while also improving profitability. The revenues generated by the international media company grew by 2.7 percent to €12.3 billion (previous year: €12.0 billion). Acquisitions and an upturn in the established businesses both played a part in this growth. Adjusted for currency and portfolio effects, revenues were up by 2.4 percent.

The operating result increased significantly during the period under review, by 11.7 percent to €907 million (previous year: €812 million). All of Bertelsmann’s divisions contributed to this improved earnings situation, except the BMG music division, which scheduled the bulk of its new releases in the recorded-music business for the last quarter of 2005.

Bertelsmann improved its revenues considerably by 12.5 percent to €4.3 billion in Q3/2005 (previous year: €3.8 billion), while Operating EBIT grew by 21.8 percent to €263 million (previous year: €216 million).

Siegfried Luther, Vice Chairman of the Executive Board and Chief Financial Officer, stated: “Recent strategic acquisitions have impelled growth at Bertelsmann. Our results are showing positive development. We will stay the course and continue to expect an increase in revenues and earnings for all of 2005.”

Net income before minority interest amounted to €653 million (previous year: €641 million). Special items totaled €79 million (previous year: €237 million), and thus contributed much less to the net income than last year. They include €213 million in capital gains, primarily from the sale of Gruner + Jahr’s US magazine business and the formation of the Arvato Infoscore and Prinovis joint ventures. They also reflect costs of restructuring and integration in the music division and in Direct Group’s club businesses totaling minus €134 million.

Investments made during the period under review totaled €2.3 billion (previous year: €588 million), mainly in financial assets. This increase was in connection with important strategic acquisitions: Bertelsmann enlarged its holdings in RTL Group to 90.4 percent. RTL Group in turn amplified its stake in Britain’s channel Five to 100 percent. Gruner + Jahr took over the majority of shares in Motor-Presse Stuttgart. The joint ventures Prinovis and Arvato Infoscore took up operations. Direct Group acquired Columbia House, the largest specialized retailer of DVDs in the U.S., and Privat, a French bookselling chain.

Economic debt, comprised of net financial debt, profit-participation capital and pension provisions, rose to €4.2 billion (December 31, 2004: €2.6 billion) due to the investments made. At the end of September 2005, Bertelsmann had 84,984 employees worldwide (December 31, 2004: 76,266). This hefty increase is attributable to the above mentioned acquisitions and the dynamic business performance of the media services provider Arvato.

Figures at a Glance (in € millions)

 

 

Jan 1, 2005 to

Sep 30, 2005

Jan 1, 2004 to

Sep 30, 2004

Revenues

12,284

11,956

Operating EBIT by divisions

Corporate/Consolidation

Operating EBIT

976


(69)

907

874


(62)

812

Special items

79

237

EBIT (Earnings before interest and taxes)

986

1,049

Net interest

(56)

(52)

Other financial expenses and income

(133)

(112)

Income taxes

(144)

(244)

Net income before minority interest

653

641

Minority interest

(178)

(120)

Net income after minority interest

475

521


Investments

2,296

588


 

At Sep 30, 2005

At Dec 31, 2004

Economic Debt

4,234

2,632

Employees

84,984

76,266


Definition of Operating EBIT: Operating EBIT refers to earnings before interest, taxes and special items.

About Bertelsmann AG

The media company Bertelsmann commands globally leading positions in the major markets. Its core business is the creation of first-class media content. Bertelsmann includes RTL Group, Europe’s No.1 in television and radio, as well as the world’s biggest book-publishing group, Random House, with more than 100 publishing imprints (Alfred A. Knopf, Bantam, Goldmann). Gruner + Jahr, the European No.1 in magazine publishing (Stern, Geo, Capital) and the BMG music division – comprised of the Sony BMG joint venture (Anastacia, Alicia Keys, Beyoncé, Dido, Usher) and BMG Music Publishing – also stand for creativity and powerful brands. The Arvato division bundles the group’s media services, which include the expanding units Arvato Logistics Services and Arvato Direct Services (distribution, service centers, customer relationship management), along with state-of-the-art printers, storage media production and comprehensive IT-services. Bertelsmann’s direct-to-customer businesses are bundled in Direct Group: book and music clubs with more than 35 million members all over the world.

For further questions, please contact:

 

Oliver Herrgesell

Senior Vice President Media Relations

Phone: +49 – 52 41 – 80 24 66

oliver.herrgesell@bertelsmann.com
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