Bertelsmann Keeps Group Profit Near-Stable in First Half of 2020

In the Corona-dominated first half of 2020, Bertelsmann benefited from its diversified business portfolio and high share of digital businesses. While the advertising-financed businesses of RTL Group and Gruner + Jahr as well as the printing businesses clearly felt the effects of the corona pandemic, book publishing, the music business, the Arvato service businesses, and the education business proved robust. All in all, the international media, services, and education company recorded a single-digit percentage decline in revenues and an operating EBITDA of over one billion euros. Group profit was very nearly at the previous year’s level.

Thanks to the Corona countermeasures, more than 60 percent of the revenue decline was offset on the cost side, and the economic debt was reduced. For the second half of 2020, the company expects a gradual recovery of the advertising markets. Bearing in mind the high degree of forecasting uncertainty, revenues and operating earnings, excluding the TV and magazine businesses, should reach the previous year’s levels.

During the reporting period, Bertelsmann’s Group revenues declined by 8.9 percent to €7.8 billion (H1 2019: €8.6 billion). The organic decline in revenues was 7.9 percent. The Group’s growth businesses were stable at €2.9 billion. They now account for 37 percent of total revenues, after 35 percent in the previous year. BMG, Majorel, Arvato Supply Chain Solutions, Arvato Financial Solutions, and the Bertelsmann Education Group, developed positively.

Operating EBITDA was €1.01 billion (H1 2019: €1.29 billion). The RTL Group and Gruner + Jahr divisions in particular felt the effects of the corona-related decline in the advertising markets. In contrast, the Arvato services businesses increased their operating earnings. BMG and the Bertelsmann Education Group posted operating EBITDA at the previous year’s level.

Group profit remained stable overall at €488 million (H1 2019: €502 million).

Thomas Rabe, Chairman and CEO of Bertelsmann, said: “The first half of 2020 was dominated by the global corona pandemic. We started the year well, but since March we have been feeling the economic impact of the pandemic – especially in the advertising markets. In this situation, Bertelsmann benefits from its broad corporate portfolio and high proportion of digital business models. The declines in advertising revenues were offset to a considerable extent by the flourishing book-publishing, music, Arvato services, and education businesses in particular, but also through active cost- and cash-flow management.”

Thomas Rabe continued: “We have taken far-reaching measures to protect our employees and ensure the continuation of operations. We have massively reduced the outflow of liquidity and secured long-term financing. In recent weeks, the advertising markets have stabilized, so we expect our business in this area to improve.”

Thomas Rabe: “Besides active countermeasures against Corona, we have also laid important foundations for Bertelsmann’s long-term success by continuing to invest in high-growth businesses.”

Bertelsmann offset more than 60 percent of the revenue decline through far-reaching cost-cutting measures. At the same time, the economic debt was reduced without impairing the substance of the business through investment restraint. Bertelsmann’s Annual General Meeting has decided to suspend dividend payments in 2020.

In accordance with the terms governing the Bertelsmann 2001 profit participation certificate (ISIN DE0005229942), 15 percent on the nominal value is scheduled to again be paid out on August 31, 2020. The payout for the 1992 profit participation certificate (ISIN DE0005229900) will be 7.36 percent (previous year: 7.83 percent).

Bernd Hirsch, Bertelsmann’s Chief Financial Officer: “In recent months, we have reduced the outflow of liquidity in the Group and the economic debt. Bertelsmann’s financing is secured for the long term. Excluding the negative corona effects on the advertising-financed businesses, we expect operating results for the year as a whole to be roughly on par with the previous year. However, forecast uncertainty for the full year remains high. We will continue our active countermeasures.”
detail at: https://www.bertelsmann.com/news-and-media/news/bertelsmann-keeps-group-profit-near-stable-in-first-half-of-2020-despite-corona.jsp?atn=6249&abp=6249,8182,