Bertelsmann, parent to publisher Random House

Penguin Random House Helps Boost Bertelsmann 2019 Performance

March 25, 2020
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Gütersloh, March 24, 2020 – Media conglomerate Bertelsmann had a successful financial year in 2019 with an increase in revenues, record operating EBITDA, and group profits again of over €1 billion.

An important milestone was Bertelsmann’s full acquisition of Penguin Random House as part of its RTL Group. PRH partly fueled the 2019 growth with an increase in revenues to €3.63million, compared to €3.42 million in 2018.

Given this positive business performance, the international media, services, and education company is well prepared to emerge safely from the current crisis due to the global spread of the novel coronavirus. Bertelsmann made a number of strategic advances in 2019.

Bertelsmann achieved its best-ever operating result in 2019.  Revenues exceed €18 billion. Growth platforms grew organically by 7 percent. Digital businesses contribute more than 50 percent of Group revenues for the first time and profits grew for the fifth consecutive year.

In December 2019, the Group announced its complete acquisition of the Penguin Random House book publishing group. The CRM company Majorel took up its operations, and in Germany, the Bertelsmann Content Alliance, which bundles the content businesses of
the Group’s German subsidiaries successfully began operations.

Thomas Rabe, Chairman and CEO of Bertelsmann, emphasized: “We have taken many measures to protect our employees’ health and well-being in this coronavirus crisis. Bertelsmann is well prepared financially. We are profitable, have high liquidity, a comfortable equity ratio, and ratings continue unchanged in the investment-grade category. The broad setup of our businesses makes us less susceptible to economic fluctuations and allows us to continue investing in our future without compromising the substance of our business.”

Thomas Rabe continued: “In this extraordinary situation, all media are of special societal and systemic relevance. In Germany, we are part of the critical infrastructure which must be maintained and supported, especially now. We provide authoritative information and entertainment to millions of people, who now face unprecedented disruption to their personal and professional lives in connection with curbing the spread of the coronavirus.”

Group revenues in 2019 rose to €18.0 billion (previous year: €17.7 billion). In addition to Penguin, Random House, the Group’s strategic growth platforms contributed to this increase. Nearly all business units recorded organic growth. The Group’s high-growth businesses reported particularly strong increases. Their organic growth amounted to seven percent, and their share of Group revenues increased to 36 percent. At 51 percent, the share of digital businesses in Group revenues exceeded the 50-percent target for the first time.

Operating EBITDA reached a new historic high at €2.9 billion (previous year: €2.6 billion). The main drivers were the services subsidiary Arvato and the Bertelsmann Education Group, each of which posted a significant increase in earnings. The first-time application of the new
IFRS 16 financial reporting standards also had a positive effect. But even without this effect, operating EBITDA was at a record level and exceeded the high prior-year figure. Group profit, at €1.1 billion (previous year: €1.1 billion), exceeded the billion-euro mark for the fifth consecutive year. Besides a good operating performance by the individual divisions, this was also due to lower charges for special items. The fund activities pooled in the Bertelsmann Investments division once again made a relevant contribution to earnings.

Thomas Rabe: “The good business performance was driven by a number of successful measures. As an example, the RTL Group further expanded its streaming services. The goal is to reach five to seven million paying subscribers by 2025. The complete acquisition of Penguin Random House strengthens our core businesses in the long term. We will continue to expand Penguin Random House’s businesses over the next few years, including through acquisitions. Arvato’s excellent operating performance continued in the past financial year, especially due to the expansion of e-commerce activities by our logistics services business. The newly founded CRM company Majorel had a gratifying first year. The Bertelsmann Education Group also developed positively, doubling its earnings. We are benefiting from the continued high demand for digital educational offerings.”

About Bertelsmann
Bertelsmann is a media, services and education company that operates in about 50 countries around
the world. It includes the broadcaster RTL Group, the trade book publisher Penguin Random House,
the magazine publisher Gruner + Jahr, the music company BMG, the service provider Arvato, the
Bertelsmann Printing Group, the Bertelsmann Education Group and Bertelsmann Investments, an
international network of funds. The company has 126,000 employees and generated revenues of
€18.0 billion in the 2019 financial year. Bertelsmann stands for creativity and entrepreneurship. This
combination promotes first-class media content and innovative service solutions that inspire customers
around the world. Bertelsmann aspires to achieve climate neutrality by 2030.

 

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