The global economy is expected to gradually improve over the rest of the year. The basic dynamic remains slow, however. In many advanced economies, the consolidation processes are contrasted by a stronger increase in demand, and the prospects remain rather subdued even in emerging countries. The economic estimates by the Kiel Institute for the World Economy (IfW) concerning global development are 3.5 percent for 2014, which are slightly below the previous expectations.

The expectations for the development of the US economy have been lowered in view of the poor start to the year. The IfW therefore expects real GDP in the United States to grow slightly by 1.8 percent this year. The economy in the euro zone will only recover slowly, as there remains a high level of debt and difficult credit conditions, particularly in crisis countries, continue to restrict growth. According to its latest estimates, the IfW expects real GDP in the euro zone to grow by 1.0 percent in 2014. Over the rest of the year, the economic expansion in Germany is expected to accelerate. The IfW expects real GDP to grow by 2.0 percent in 2014. According to the latest calculations by the Federal Statistical Office, real BIP fell by -0.2 percent in the second quarter of 2014 compared to the preceding quarter, which indicates that the dynamic of German economic development is slowing.

These expectations remain subject to certain risks. According to the current estimate of the European Central Bank, the economic risks in the euro zone are high as a result of the increase in geopolitical risks and development in the emerging countries and on the global financial markets. The resulting developments could adversely impact the economic situation, which is a key factor influencing Bertelsmann’s business development.

On the comparable basis of the forecasts detailed in the 2013 Annual Report, Bertelsmann expects Group revenues for 2014 to increase significantly as a result of the portfolio expansions from the 2013 financial year, which have to be taken into account for the full year, and operating EBITDA to remain stable. In view of higher amortization on intangible assets as a result of the acquisitions, Bertelsmann expects operating EBIT development to remain stable or fall slightly compared with the previous year. As a result of the portfolio expansions in financial year 2013, which have to be taken into account for the full year, as well as higher operating investments, Bertelsmann anticipates a significant increase in the level of invested capital in financial year 2014. Against this backdrop, a persistently low overall return on investment and a strong fall in BVA are expected. The revenues of Penguin Random House will be strongly above the previous year’s figure as they are taken into account for the full year’s period in the consolidated financial statements for financial year 2014.

These forecasts are based on Bertelsmann’s current business strategy as outlined in the “Business and Economic Conditions” section. The forecasts reflect a careful consideration of risks and opportunities and are based on operational planning and the medium-term outlook for the corporate divisions. All statements concerning potential economic and business developments represent opinions advanced on the basis of the information that is currently available. Should underlying suppositions fail to apply and/or further risks arise, actual results May differ from those expected. Accordingly, no assurances can be provided concerning the accuracy of such statements.