Bertelsmann Posts Record Results - But Underlying Growth Wiped-Out by BMG

28 September 2001

Boosted by acquisitions and capital gains, Europe’s number two media group Bertelsmann [after Vivendi Universal] posted record full-year results for the twelve months to June 30.

EBITA (earnings before interest, tax and amortization) for the period surged 79% to E3.16 billion, revenues rose 21% to E20bn, and net income jumped 44% to E968 million. Growth was largely driven by the sale of network service provider Mediaways, the first instalment of cash from the offloading of its stake in AOL Europe and the first-time consolidation of pan-European broadcast company RTL Group, which Bertelsmann majority-owns.

However, underlying profits at the group’s seven divisions fell from E1.25bn last year to E1.2bn. Organic growth in many units was wiped out by the poor performance of BMG, the world’s fifth largest music group, which posted an EBITA loss of E5m and a 7.6% fall in revenues to E3.7bn.

RTL’s EBITA over the period jumped from E357m to E537m, described by Bertelsmann as an “exemplary performance in a difficult market environment.” However, the unit faces continued weakness in the ad market, expected to dent projected profits in its present fiscal year [WAMN: 20-Sep-01].

Bertelsmann chief executive Thomas Middelhoff refused to make predictions for the twelve months ahead, given the uncertainty surrounding the global economy. However, he added that the group was in a good position to make acquisitions, boasting: “We’re the only media company that can afford to be aggressive these days.”

News sources: Financial Times; Wall Street Journal