The Bertelsmann CEO spoke of successes in the restructuring of the group.
(Photo: IMAGO/IPON)
Dusseldorf After the job cut at the traditional Hamburg publishing house Gruner + Jahr (G + J), the owner Bertelsmann announces the highest turnover in its history. Last year, the Gütersloh-based family company achieved sales of 20.2 billion euros – an increase of a good four percent from its own resources. The company exceeded the sales mark of 20 billion euros for the first time.
However, earnings before interest, taxes, depreciation and amortization (Ebitda) fell slightly to 1.3 billion euros. The margin fell accordingly from 17.3 to 15.8 percent. Bertelsmann announced this on Thursday morning.
The figures do not hide the fact that times are difficult for Bertelsmann and CEO Thomas Rabe. The company, owned by the Mohn family, has been criticized for announcing at the beginning of February that it would cut 700 of the 1,900 jobs at Hamburg-based publisher G+J. 45 out of 58 brands and magazines are to be sold or discontinued. Only core titles such as “Stern”, “Geo” or “Capital” remain.
Bertelsmann merged its two subsidiaries RTL in Cologne and G+J in Hamburg in early 2022. Former and current managers at G+J had accused Rabe in the Handelsblatt of deliberately miscalculating the publisher. Bertelsmann did not comment on the allegations.
>> Read more: Breaking up of Gruner + Jahr – Why are 134 million euros missing in profit?
Before the merger, Rabe had outsourced profitable business from G+J to other areas of the Bertelsmann group – such as the fast-growing app platform Applike or the stake in the news magazine “Spiegel”. Insiders also complain that many advertisers have recently dropped out because Rabe had been reviewing G+J’s portfolio for five months. In addition, the manager is said to have calculated particularly high costs for G+J and booked proceeds from Hamburg in Gütersloh.
Sales rose above the 20 billion euro mark in 2022, while profits fell slightly.
(Photo: dpa)
A look at Gütersloh’s balance sheet also shows that Bertelsmann’s most important profit generator is weakening. The profit of the Luxembourg RTL Group, in which the family company holds a good 75 percent of the shares, fell by 6.5 percent to 1.3 billion euros. However, sales increased slightly to 7.2 billion euros.
RTL suffers from a weak advertising market
The private broadcasting group, which is listed in the MDax, is suffering from a weakening advertising market in Germany. RTL Group generates a good 43 percent of its revenues from advertising. But many companies are saving on their advertising expenses in view of the uncertain and crisis-ridden situation.
In addition to RTL and G+J, Bertelsmann owns the world’s largest book group Penguin Random House, the fourth-largest music company BMG – and Arvato. With sales of €6.6 billion, the IT service provider is Bertelsmann’s second-largest division and increased its revenues and earnings. For example, Arvato manages Amazon invoices or transports medicines. According to the company, every German consumer comes into contact with Arvato services on average half a dozen times a day.
The third-largest area, Penguin Random House’s books business, achieved a profit of almost twelve percent lower than in the previous year at EUR 666 million, which is mainly due to the decline in US business. The music division BMG increased its profit by 35 percent to 195 million euros. The structurally declining printing business had to cope with a drop in earnings of 57 percent to 26 million euros. The education business doubled its earnings to more than 192 million euros.
Year of failed mergers
Rabe looks back on a year of failed mergers. Overall, Bertelsmann was unable to complete four deals with a total volume of five billion euros. The US judiciary prevented the plan to make Penguin Random House even bigger with an acquisition in the USA. The plans to create strong media companies through mergers in France and the Netherlands failed because of the cartel authorities. And in the call center branch, the subsidiary Majorel did not come together with the competitor Sitel.
>> Read more: Fourth defeat in a row: Bertelsmann fails with mergers worth five billion euros
The fact that many projects have failed recently is a turning point in Rabe’s career, who has been Bertelsmann boss since 2012. He made the company more international, more digital and faster-growing, and reduced its dependency on the cyclical advertising business. “The corporate restructuring and the strategy of the past decade are showing their effects,” said Rabe on Thursday.
Bertelsmann only wants to concentrate on a few brands in the magazine business.
(Photo: dpa)
The Bertelsmann boss recently announced major growth plans. By 2026, sales should be 24 billion euros and profits should be four billion. At the end of 2026, the contract of the 57-year-old will also expire. Bertelsmann reiterated its goal of investing five to seven billion euros by 2025 as part of its “Boost” future strategy. In the past year alone, Bertelsmann took 1.6 billion euros of this into its own hands.
A lot of money should flow into the area of digital health in particular – a global growth market. Bertelsmann wants to help employees in the healthcare sector with digital offers to complete their administrative tasks more quickly. The future activities are bundled in the Bertelsmann Investments segment.
For the current year, Bertelsmann CFO Rolf Hellermann expects “a moderate to significant increase in sales and a stable operating result”. Bertelsmann employs almost 165,000 people worldwide, 20,000 more than in the previous year.
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