The following analysis of earnings performance relates to continuing operations as of December 31, 2013. Please refer to the section “Performance of the Group Divisions” for a more detailed picture of the earnings situation.
Revenues by Division
|in € millions||2013||2012|
|Penguin Random House||262||2,393||2,655||288||1,854||2,142|
|Gruner + Jahr||937||1,128||2,065||993||1,225||2,218|
|Total revenues by division||5,957||10,771||16,728||6,069||10,397||16,466|
Group revenues from continuing operations rose 1.8 percent in financial year 2013 to €16.4 billion (previous year: €16.1 billion). The strategic portfolio expansions through the merger of Penguin and Random House as well as the full takeover of BMG (Corporate Investments) and the acquisition of Gothia (Arvato) resulted in increased revenues. Adjusted for portfolio and exchange rate effects, the Group’s organic growth was -2.8 percent. The exchange rate effects were -1.2 percent; portfolio and other effects were 5.8 percent. The organic revenue decline is attributable to the extraordinarily strong previous year at Random House, the weak European advertising markets overall, the impact of structurally declining businesses and deliberately managed revenue development at Arvato.
Revenues at RTL Group were down 1.9 percent to €5,889 million (previous year: €6,002 million) in the reporting period. The positive development of Mediengruppe RTL Deutschland and RTL Nederland partially offset the decline at Fremantle Media. As a result of the merger with Penguin on July 1, 2013, and the acquisition of the remaining shares in Random House Mondadori on January 1, 2013, revenues at Penguin Random House were 23.9 percent above the previous year at €2,655 million (previous year: €2,142 million). Adjusted for these portfolio effects, organic revenues at Penguin Random House declined as the previous year had been largely characterized by the bestseller performance of the “Fifty Shades” trilogy. Revenues at Gruner + Jahr were down 6.9 percent to €2,065 million (previous year: €2,218 million). The lower revenues are partly attributable to portfolio effects from the partial closure of the business media publishing division and the sale of G+J Poland. In addition, the advertising and circulation business posted declining revenues particularly in France, Austria, Spain and China. This is counteracted by revenue growth from the digital businesses. Arvato’s revenues remained stable at €4,414 million (previous year: €4,419 million). Financial Services and the CRM and IT Services units showed positive development. By contrast, replication at Arvato posted a fall in revenues due to the general declining market development and the disposal of the replication activities in Brazil. Impacted further by the structural decline of the print businesses, revenue at Be Printers declined by 7.5 percent to €1,123 million (previous year: €1,214 million). Revenues at Corporate Investments, despite declining revenues in the Club and Direct Marketing activities, increased by 23.6 percent to €582 million (previous year: €471 million) following the full takeover of BMG.
There were minor changes in the geographical breakdown of revenues from continuing operations compared to the previous year. The proportion of revenues generated in Germany was 34.9 percent compared with 36.1 percent in the previous year. The revenue share generated by France amounted to 15.4 percent (previous year: 15.8 percent). The share of total revenues generated by the other European countries amounted to 25.5 percent compared with 24.9 percent in the previous year. The revenue share generated by the United States increased to 17.3 percent (previous year: 16.3 percent) and the other countries achieved a revenue share of 6.9 percent (previous year: 6.9 percent). This means that the proportion of total revenues attributable to countries other than Germany rose slightly to 65.1 percent (previous year: 63.9 percent), which is primarily attributable to strategic portfolio expansions in financial year 2013. Year on year, there was only a slight change in the ratio of the four revenue streams (own products and merchandise, advertising, services, rights and licenses) to overall revenue.
Operating EBIT and Operating EBITDA
|in € millions||2013||2012|
|Operating EBIT by division|
|Penguin Random House||309||325|
|Gruner + Jahr||146||168|
|Total operating EBIT by division||1,837||1,822|
|Operating EBIT from continuing operations||1,754||1,732|
|EBIT (earnings before interest and taxes)||1,708||1,327|
|Earnings before taxes from continuing operations||1,347||1,005|
|Earnings after taxes from continuing operations||928||612|
|Earnings after taxes from discontinued operations||(58)||–|
|Group profit or loss||870||612|
|attributable to: Bertelsmann shareholders||498||477|
|attributable to: Non-controlling interests||372||135|
Bertelsmann achieved operating EBIT of €1,754 million in financial year 2013 (previous year: €1,732 million). Return on sales of 10.7 percent was again in the double-digit range (previous year: 10.8 percent). The earnings reflected the positive overall business performance and the strategic portfolio measures implemented in the reporting period. Core businesses were strengthened, growth platforms developed and necessary consolidation steps introduced in structurally declining business units.
RTL Group’s operating EBIT increased by 6.8 percent from €1,065 million in the previous year to €1,137 million in 2013, primarily as a result of the improved earnings contributions of Mediengruppe RTL Deutschland. Penguin Random House achieved operating EBIT of €309 million compared with €325 million in the previous year. The growth resulting from the merger of Penguin and Random House virtually offsets the decline in earnings after the strong previous year. At Gruner + Jahr, operating EBIT fell to €146 million (previous year: €168 million). The earnings decline is attributable to falling advertising and circulation revenues particularly in China, Austria and France, as well as to costs associated with the accelerated digital transformation. Arvato generated an operating result of €244 million (previous year: €244 million) and benefited from improved performances in the CRM and SCM units. This was contrasted by start-up costs for takeovers as well as set-up costs for newly acquired customers. Operating EBIT at Be Printers reduced to €41 million (previous year: €58 million) as a result of the persistently declining print market. Earnings from activities grouped under Corporate Investments came to €-40 million (previous year: €-38 million).
Year on year, operating EBITDA from continuing operations rose to €2,313 million. The increase of €103 million compared with the previous year’s figure of €2,210 million is primarily attributable to RTL Group and Corporate Investments. Operating EBITDA of Penguin Random House and Arvato increased slightly year on year in each case. Meanwhile, operating EBITDA of Gruner + Jahr and Be Printers declined. The following table shows a detailed breakdown of operating EBITDA by division:
Operating EBITDA by Division
|in € millions||2013||2012|
|Penguin Random House||363||352|
|Gruner + Jahr||193||213|
|Total operating EBITDA by division||2,392||2,295|
Special items primarily reflect the strategic measures implemented in the reporting period. The majority of restructuring expenses relate to structurally declining businesses, in particular with the imminent closure of the Prinovis location in Itzehoe. The restructuring expenses also include costs for the implementation of the new organizational structure of Gruner + Jahr and Arvato as well as integration costs in connection with the merger of Penguin and Random House. By contrast, profit of €109 million was recorded from the revaluation of the fair value after the takeover of the remaining BMG shares as well as a write-up of €72 million on the fair value of the participation at Atresmedia.
Special items in the reporting period totaled €-46 million (previous year: €-405 million). They consist of impairments and reversals on impairments totaling €44 million (previous year: €-155 million), fair value remeasurement of investments of €110 million (previous year: €18 million), capital gains of €111 million (previous year: €12 million) and restructuring expenses and other special items totaling €-297 million (previous year: €-288 million). In the reporting period, there were adjustments to carrying amounts on assets held for sale in the amount of €-14 million (previous year: €8 million).
Adjusting operating EBIT for special items of €-46 million (previous year: €-405 million) resulted in EBIT of €1,708 million. The increase of €381 million from the previous year’s figure of €1,327 million is primarily attributable to the overall lower burden from special items.
Group Profit or Loss
The year-on-year financial result changed from €-322 million to €-361 million. The deviation is based on one-time costs of €40 million for the early repayment of financial debt, which in future will have a positive impact on the financial result. The increased tax expenses of €-419 million (previous year: €-393 million) largely resulted from the improved pre-tax earnings. This produced after-tax earnings from continuing operations of €928 million (previous year: €612 million). The after-tax earnings from discontinued operations of €-58 million (previous year: –) are non-cash follow-on effects related to the disposal of the Direct Group businesses, which were formerly shown as discontinued operations. Taking into account the after-tax earnings from discontinued operations, this results in a Group profit of €870 million (previous year: €612 million). This corresponds to an increase of €258 million compared with the same period in the previous year. The share held by non-controlling interests was €372 million (previous year: €135 million). The increase in non-controlling interests compared with the previous year is primarily attributable to the reduction of the RTL participation and the Penguin Random House merger. The share of Group profit held by Bertelsmann shareholders was €498 million (previous year: €477 million). At the Annual General Meeting of Bertelsmann SE & Co. KGaA, a dividend payout of €180 million will be proposed for financial year 2013 (previous year: €180 million).