group development 2013 and strategy, bertelsmann ... · 1835 – gütersloh 2013 – new york,...

Group Development 2013 and Strategy, Bertelsmann Management SE Executive BoardAnnual Press Conference, March 26, 2014 in Berlin

March 26, 2014 · Bertelsmann · Annual Press Conference

Financial year 2013 –Strong business performance, progress along strategic priorities

Group development 2013

Strategy

Revenues increased to €16.4 billion

Double-digit return on sales, group profit increased by more than 40%

Strategic flexibility due tostronger financial position

Major successes in strategy implementation

Strengthening the growth profile

Stepwise development of a third pillar in addition to media and services: Education

1 2 3

1 2 3

Thomas Rabe, Chairman and CEO Judith Hartmann, Chief Financial Officer

Group development 2013


Group key figures 2013 –High profitability, group profit increased by more than 40 percent

Group profit (in € millions)Operating EBITDA (in € millions)Revenues (in € billions)

EBITDA margin 13.8% 14.1%

Operating EBIT 1,732 1,754

2013

870

2012

612

2013

16.4

2012

16.1

2013

2,313

2012

2,210

+4.7%

+1.8%

+42%


RTL Group –High profitability, expansion of families of channels and non-linear TV

Significant increase in profitabilityOperating EBITDA (in € millions)

Revenues (in € millions)

2013

5,889

2012

6,002

2013

1,253

2012

1,333

• High profitability despite mostly declining advertising markets in Europe

• Further expansion of families of channels

• Continued strong expansion of digital businesses and non-linear TV offerings, also through participations(e.g. Broadband TV, Divimove, StyleHaul, Videoland)

• Regional expansion into Southeast Asia in cooperation with CBS

• Placement of shares and listing on the Frankfurt Stock Exchange, inclusion in MDAX

EBITDA margin20.9% 22.6%

-1.9%

+80


Penguin Random House –Merger to the world’s largest trade book publisher

Closing July 1, 2013Operating EBITDA (in € millions)


2013

2,655

2012

2,142

2013

363

2012

352

• Merger of Random House with Penguin (Pearson), presence on all continents

• Very good operating performance following exceptional bestseller performance in 2012

• 261 titles on the “New York Times” bestseller list since the merger

• More than 100 million e-books sold

• Numerous literary awards, including Nobel prize for literature to Alice Munro and four Pulitzer prizes


+23.9%

+11


Gruner + Jahr –Strategic, organizational and management realignment

House of content with strong brandsRevenues (in € millions)

2013

2,065

2012

2,218

• New Executive Board, strategic realignment in Germany according to Communities of Interest

• Vitalization of major magazine brands

• Positive business development in Germany due to good performance of the G+J magazines in the advertising market

• Revenue shortfall due to divestitures and declining revenues mainly in the international business

• Investments in digital transformation and new businesses

• Expansion of digital business through organic growth and acquisitions

Operating EBITDA (in € millions)

2013

193

2012

213


-20

-6.9%


Arvato –Focusing on fast-growing services


2013

401

2012

391

• New CEO and reorganization according to Solution Groups and countries

• Slight increase in earnings, stable revenues

• Significant growth from services for customers in the internet, high-tech and consumer goods sectors

• Acquisition of Gothia Financial Group as largest transaction in Arvato’s history

• Growth in China


2013

4,414

2012

4,419

Change in leadership and reorganization


-0.1%

+10


Be Printers –Difficult market environment

Strong position in the print marketRevenues (in € millions)

2013

92

2012

115

• Revenue and operating EBITDA below previous year due to lower volumes

• Price pressure due to overcapacity in the market

• Efficiency programs and plant closures to offset negative market development

• Stable earnings development in America


2013

1,123

2012

1,214


-23

-7.5%


Corporate Investments: BMG –Acquisition of 100%, additional catalog purchases and artist signings

Number 4 worldwide in the music rights business

• Buyout of partner KKR as of March 30, 2013

• Purchase of additional music catalogs, including Mute, Primary Wave, Virgin/Famous, Sanctuary and Talpa

• New contracts signed with numerous international and national artists, e.g., Mick Jagger, Keith Richards, Robbie Williams and the Backstreet Boys

• Expansion of presence in the most important music markets, including new office in Canada

• Music rights management for copyrights, master rights and audiovisual rights

• More than 1 million copyrights

• 13 Grammy Awards in 2013


Financial key figures 2013 –Significant increase in group profit

Change vs. 2012

870Group profit

Earnings after taxes from discontinued operations

Income taxes

Financial result

EBIT 1,708

Special items

Depreciation/Amortization

Operating EBITDA 2,313

-46

-361

-58

-559

-419

+103

-81

+359

+381

-39

-26

-58

+258

+5%

-17%

n.m.

+29%

-12%

-7%

n.m.

+42%

2013 (in € millions)


Investments and free cash flow 2013 –Strategy implementation leads to significant increase in investments

2013

1,760

2012

1,861

Cash conversion rate

107% 100%

Operating free cash flow (in € millions)

Continued strong cash generation,targeted cash conversion rate: 90-100%

Investments (in € millions)

Increase particularly through acquisitions

2013

1,988

397

411

1,180

2012

655

390

17788

+204%

-5.4%Acquisitions

Intangible assets

Other


Placement of shares of RTL Group –Proceeds of €1.5 billion

Starting point

• Additional equity required to finance group strategy

• Raising of capital at divisional level

Placement of RTL Group shares

• Sale of 25.5 million shares of RTL Group results in proceeds of €1.5 billion

• Bertelsmann continues to be majority shareholder with stake of 75.1%

• Inclusion in MDAX and MSCI World


Financial position 2013 –Stronger financial position creates strategic flexibility

Baa1, stable

BBB+, stable

-4,178-413

-1,185

-1,944

-636

-4,773-413

-997

-2,146

-1,218

Leverage factor

20132012

Rating

32

412013

2012

Equity ratio (in %)

Target < 2.5

Target > 25

Economic debt (in € millions)

2013 2.0

2012 2.3

Present value operating leases

Pension provisions

Net financialdebt

Profit participationcapital

Bertelsmann Managment SE Executive Board

Strategy


Overview –Transformation along four strategic priorities

Strengthening the core

Digitaltransformation

Growth regions

Growth platforms

1 2 3 4

Higher growth More digital More international

Target portfolio

Strategic priorities


Strengthening the core –Strategic strengthening of Bertelsmann’s book publishing business

1835 – Gütersloh 2013 – New York, London, Barcelona, Melbourne, New Delhi


Strengthening the core –Strategic strengthening of Bertelsmann’s book publishing business

250imprints

7015,000New publications per year(incl. Verlagsgruppe RH Germany)

700,000,000books sold per year

€3,000,000,000$4,000,000,000£2,600,000,000

261“The New York Times” bestsellers

July to December 2013

Rev

enue

s

over Nobel prizes


Strengthening the core –Key success factors for the merger of Penguin Random House

Data analyticsDigital sales channel development

Digital product developmentSupply chain

Digital Marketing ToolsAuthor services

SystemsProcesses

Corporate culture

Integration Innovation International footprint


Strengthening the core –Passion for our authors and books is the most important success factor

Emily Giffin

David Mitchell

Janet Evanovich

John GrishamDiana Gabaldon

Haruki Murakami

Danielle Steel

Nora Roberts

Ina Garten

Jodi Picoult

Lee Child

Lena Dunham

Geoffrey Ward and Ken Burns

Harlan Coben

Ken FollettRobert Gates

Sue Monk Kidd

Neil Patrick HarrisClive Cussler

R. J. Palacio

Jamie Oliver

James Patterson

Isabel Allende

Timothy GeithnerPaulo Coelho

Lauren Kate

J.D. Robb

Dan Brown

Mark Owen

Charlotte Link


Digital transformation –Strong performance of RTL Group through leading market positions

• #1 or #2 in eight European countries

• Leading broadcaster:55 TV channels and 27 radio stations

• World’s leading content producer for TV entertainment

• 8,500 program hours per year; distribution in over 200 countries

• Digital: integral component of all core businesses

• Innovative ad sales on all screens and devices

Broadcast Content Digital


Digital transformation –Video stands at the core of RTL Group’s digital strategy …

# Companies1 Google / YouTube2 Facebook3 AOL (incl. Adap.TV)4 VEVO5 DAILYMOTION6 RTL Group7 Maker Studios8 Hulu9 Microsoft Sites

10 Yahoo Sites

1) ComScore Video Metrix, based on the average figures for video views per month in Q4/2013; excluding Asia and Russia, ad networks and ad exchangesRTL Group: adjusted internal figures, average Q4/2013, including Broadband TV and Videostrip, excluding Divimove, StyleHaul and Atresmedia

Strategic focus Strong growth Top 10 global players1)

Video on DemandCatch-up TV services

Web OriginalsOriginal content production

Multi Channel NetworksWorldwide distribution

1

2

3

+143%

20132012

6.9

16.8

Video views RTL GroupFull year (in billions)


Digital transformation –… and is accelerating the digital transformation of the TV business

• €236 million online revenues in 2013• Revenues from online video advertising +31%

year on year change

• Europe’s #1 media company in the online video segment

• 2.2 billion online video views per month1)

• Market entry through investment in Broadband TV, the #3 Multi Channel Network on YouTube2)

• Investments in fashion and comedy portals

1) Average Q4/2013, excluding Divimove, StyleHaul and Atresmedia 2) Comscore YouTube partner ranking (excluding music offers)

Increase revenue from online advertising and online transactions

Expand non-linear offers

Develop Multi Channel Network business

✔

+26%Growth of total online revenues compared to the previous year

✔

✔


Growth platforms –Continuous expansion of strong market position of Arvato Financial Solutions

Financial servicesindividual solutions

international customers

Arvato Financial Solutions#3 in Europe

6,000employees in 21 countries

Executionpayment processing

risk managementlargest acquisition in

Arvato‘s history

10,000B2B customers worldwide

Growth driversinternationalization

increase in digital payments

> 30%average revenue growth in the

last ten years

100,000,000 risk assessments per year


Growth platforms – Arvato as leading service provider with integrated service portfolio for e-commerce companies

European e-commerce market 20131) E-commerce at Arvato

• Service portfolio: IT solutions front and back end, CRM solutions, delivery and returns logistics as well as financial services

• Industry focus: trade, fashion and electronics/high-tech

• More than 3,000 employees

• Over 70 webshops for international brands

1) Forrester Research

US$

166 bn> 10%growth p.a.

Arvato is Europe‘s #1 service provider in fashione-commerce


Growth platforms –Accelerated expansion of activities in education segment

Bertelsmann focus Current activities Outlook

• Investment commitment in a three-digit million range for successor fund University Ventures Fund II

• Initial investments of fund already expected in second quarter 2014

• Ongoing review of potential investments

Higher education online

Higher education medical

Higher education services

High, profitable market growth supported by mega trends

Partnership with entrepreneurs via University Ventures I

Accelerated expansion, University Ventures II

March 26, 2014 · Bertelsmann · Annual Press ConferencePage 27 March 26, 2014 · Bertelsmann · Annual Press Conference

Growth regions –Expansion of Bertelsmann’s activities in 2013

BrasilIndia

China

Thailand

Malaysia

Philippines

Singapore

Education Ventures


Creativity –Foundation for economic success

13.4munique users per

month on Chefkoch.de

100me-books sold in

2013

> US$ 1bnin music rights

#1 or #2broadcaster in eight European

countries> 90

journalism awards won in

2013

77.000e-book-titles

2.2bnmonthly video

views

107m TV households

reached in Europe> 1m

song rights

200,000downloads of

“Geo” app since launch

15,000new

publications in 2013

13Grammy Awards


Outlook –Long-term profitable growth

Outlook 2014

3 – 5 years

~20

2013

16.4Significant increase in revenues

Increase in group profit

Continued high profitability

Perspective (Revenues in € billions)

Organicgrowth

Decliningbusinesses

Acquisitions


Summary

Strong business development with good operating performance and high profitability

Major successes in implementing strategy in 2013, now continuationalong all four strategic priorities

Revenue growth and high profitability expected in 2014, €20 billion revenuesas medium term objective

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group development 2013 and strategy, bertelsmann ... · 1835 – gütersloh 2013 – new york,...

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