Bertelsmann Annual Results 2013

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1 Bertelsmann Annual Results Bertelsmann Investor Conference Call March 26, 2014 Judith Hartmann Member of the Executive Board and Chief Financial Officer of Bertelsmann

2 Summary and highlights Financial year Positive performance Revenues up 1.8%, profitability further improved Operating EBITDA up 4.7% Group profit increased 42% Solid financial position Stronger financial position, high level of investments Comfortable liquidity position Target rating Baa1/BBB+ with stable outlook Strategy implementation well on track Significant progress along strategic priorities Page 2

3 Group key figures Positive performance, Operating EBITDA above prior year, group profit increased significantly Continuing operations Revenues (in billions) Operating EBITDA (in millions ) Group profit (in millions ) +1.8% EBITDAmargin 13.8% 14.1% % 2,210 2, % Revenue growth driven by strategic portfolio expansions (Penguin Random House, BMG, Gothia) Accelerated scaling back of structurally declining businesses Mediengruppe RTL Deutschland achieved best result ever, positive development at Arvato Results impacted by investments in digitization and start-up losses for new businesses as well as structurally declining businesses Group profit increased thanks to lower negative effects from special items and improved operating performance Page 3

4 Divisions Overall high level of profitability maintained Continuing operations EBITDAmargin 21% 23% 16% 14% 10% 9% 9% 9% 9% 8% Revenues (in billions) Operating EBITDA (in millions) ,253 1, RTL Group Penguin Random House Gruner + Jahr Arvato Be Printers RTL Group: High profitability despite largely declining TV advertising markets in Europe PRH: Merger to world s largest trade book publisher, good operating performance given publishing success in G+J: Digital growth and market share gains in Germany offset by continued decline of print magazines Arvato: Stable revenues and increased earnings, acquisition of Gothia Financial Group Be Printers: Decreasing volumes and continuing price pressure due to excess capacity in the industry Page 4

5 Group profit Significant increase due to higher operating performance and lower negative effects from special items in millions Change compared to Operating EBITDA 2,313 +5% +103 Depreciation % -81 Special items -46 fav EBIT 1, % +381 Financial result % -39 Income taxes % -26 Earnings after taxes from discontinued operations -58 unfav. -58 Group profit % +258 Page 5

6 Group key figures Diverse revenue base across regions and sources Revenue share, continuing operations Regions in Revenue sources in United States 17.3% (16.3%) Other countries 6.9% (6.9%) 34.9% (36.1%) Germany Rights and licenses 18.2% Services 23.2% (16.6%) (22.9%) 11.5% 8.7% (11.2%) (8.5%) Own Products and merchandise 27.0% 39.8% (28.6%) (39.8%) Other European countries 25.5% (24.9%) 15.4% (15.8%) France 25.5% (26.1%) Advertising (previous year's figures) Page 6

7 Investments and free cash flow Strategy implementation leads to significant increase in investments Investments (in millions) Operating free cash flow (in millions) +204% 1,988 Cash Conversion Rate 107% 100% -5.4% 1,180 Acquisitions 1,861 1, Intangible assets Other Increase particularly through acquisitions Continued strong cash generation, targeted cash conversion rate: % Page 7

8 Financial status Stronger financial position, in line with all financial targets Leverage Factor < 2.5x Economic debt (in millions) 3.2x 2.3x 2.4x 2.3x 2.0x 6, Interest Coverage Ratio > 4.0x 6.4x 5.2x 4.4x 4.1x 6.0x Net debt Profit Participation Capital Operating Leases 2, ,119 4,915 1, ,024 4,913 1, ,773 1, , , Equity Ratio > 25% Pensions 1,406 1,565 1,738 2,146 1,944 31% 35% 34% 32% 41% Baa1, outlook: stable BBB+, outlook: stable Page 8

9 Financial status Bond tender improved maturity profile, no refinancing required in millions 2,745 Liquidity YTD Financing Activities Aug : Early termination of US$200m US PP due 2015 Dec : Successful tender offer for 2015 and 2016 bonds (total 284m) Jan/Feb/March 2014: 750m bond and 217m promissory notes repaid from existing liquidity No further maturities in 2014 Repaid in Bonds Promissory notes Repaid in , ,000 Syndicated loan (2018) /31/ Page 9

10 Group strategy Transformation of Bertelsmann along four strategic priorities Target portfolio Higher growth More digital More international Strategic priorities Strengthening the core Digital transformation Growth platforms Growth regions Page 10

11 Group strategy Significant progress in implementing strategic priorities 1 Strengthening the core RTL: Expanding families of channels Penguin Random House: Merger to the world s largest trade book publisher G+J: Strategic and organizational realignment, management changes Arvato: Reorganized into Solution Groups and countries Corporate: Implementation of Operational Excellence program 2 Digital transformation RTL: Online offerings generated total of 16.8 billion video views Penguin Random House: Over 100 million e-books sold G+J: Focus on e-magazines, mobile offerings and apps 3 Growth platforms BMG: Full acquisition, further artist signings and takeovers of music catalogs Education: Further expansion of education business (UV I & II) Arvato: Acquisition of financial services provider Gothia 4 Growth regions RTL: Strategic partnership with CBS in Southeast Asia Arvato: Further growth with services in China Investments: BAI fund expanded portfolio Page 11

12 Summary and outlook Financial year 2014 Market development Global economic growth expected slightly above prior year Positive performance in 2014, mixed market expectations Performance Significant increase in revenues due to strategic portfolio expansions made in High profitability expected to be maintained Cash Conversion Ratio within target range of % Strategy Continued transformation and further implementation along strategic priorities Page 12

13 Q&A-Session Bertelsmann Investor Conference Call March 26, 2014 Judith Hartmann Member of the Executive Board and Chief Financial Officer of Bertelsmann

Group Results 2010 and Financing, Thomas Rabe Annual Press Conference, Bertelsmann AG, March 29, 2011 in Berlin

Group Results 2010 and Financing, Thomas Rabe Annual Press Conference, Bertelsmann AG, March 29, 2011 in Berlin Group Results 2010 and Financing Thomas Rabe, Chief Financial Officer, Bertelsmann AG Group