The following analysis of earnings performance relates to continuing operations as of December 31, 2016. Please refer to the “Performance of the Group Divisions” section for a more detailed picture of the results of operations.
In the financial year 2016, Group revenues of €17.0 billion were 1.1 percent below the previous year’s figure (previous year: €17.1 billion). The revenue decline is primarily attributable to negative exchange rate effects, portfolio effects of disposals and declining organic revenues at Penguin Random House and Bertelsmann Printing Group. This was contrasted by organic revenue growth at RTL Group in particular and at BMG, Arvato and Bertelsmann Education Group. The Group achieved organic growth of 0.9 percent, adjusted for exchange rate and portfolio effects. The exchange rate effects were -1.3 percent and the portfolio effects were -0.7 percent.
Revenues at RTL Group rose 3.5 percent to €6,237 million (previous year: €6,029 million). The organic growth was 3.2 percent. This was mainly attributable to the fast-growing digital activities and positive developments in the French and German television businesses. Revenues at Penguin Random House declined by 9.6 percent to €3,361 million (previous year: €3,717 million). The organic growth was -3.9 percent. The revenue decline resulted primarily from portfolio and exchange rate effects. A decline in e-book revenues that was partly due to new sales conditions in the retail market had an adverse effect on organic growth. At €1,580 million, Gruner + Jahr’s revenues were down 1.9 percent year on year (previous year: €1,611 million). The organic growth was -1.3 percent. The revenue decline stems largely from the portfolio effects of disposals and declining print advertising and circulation revenues. This was offset by revenue growth of new and digital businesses. Revenues at BMG increased by 12.2 percent to €416 million (previous year: €371 million) as a result of further organic and acquisitive business expansion. The organic growth was 12.8 percent. Revenues at Arvato rose 1.4 percent to €3,838 million (previous year: €3,783 million). The organic growth was 3.9 percent. The increase stemmed in particular from positive business development in the CRM and Financial Solutions divisions. Revenues at Bertelsmann Printing Group fell 6.9 percent to €1,624 million (previous year: €1,744 million). The organic growth was -4.0 percent. The revenue decline was primarily attributable to the closure of Sonopress USA in the reporting period and the disposal of the Spanish print companies in 2015. Bertelsmann Education Group increased its revenues by 28.9 percent to €142 million (previous year: €110 million). The organic growth was 15.9 percent. The rise was primarily the result of the organic and acquisitive expansion of Relias Learning. None of the held investments in the fund activities grouped under Bertelsmann Investments are fully consolidated.
|in € millions||2016||2015 (adjusted)|
|Germany||Other countries||Total||Germany||Other countries||Total|
|Penguin Random House||266||3,095||3,361||281||3,436||3,717|
|Gruner + Jahr||959||621||1,580||910||701||1,611|
|Bertelsmann Printing Group||908||716||1,624||974||770||1,744|
|Bertelsmann Education Group||–||142||142||–||110||110|
|Total divisional revenues||5,999||11,199||17,198||5,932||11,434||17,366|
There were changes in the geographical breakdown of revenues compared to the previous year. The share of revenues generated in Germany was 34.6 percent compared to 33.9 percent in the previous year. The revenue share generated by France amounted to 13.2 percent (previous year: 13.2 percent). In the United Kingdom, the revenue share was 6.4 percent (previous year: 6.7 percent). The share of total revenues generated by the other European countries amounted to 18.3 percent compared to 17.7 percent in the previous year. The revenue share generated by the United States was 20.8 percent (previous year: 21.6 percent), and the other countries achieved a revenue share of 6.7 percent (previous year: 6.9 percent). This means that the share of total revenues generated by foreign business was 65.4 percent (previous year: 66.1 percent). Year on year, there was a slight change in the ratio of the four revenue sources (own products and merchandise, advertising, services, rights and licenses) to overall revenue.
The revenue share generated by the growth businesses increased to 30 percent overall (previous year: 28 percent), thanks to organic growth and acquisitions, while the revenue share of structurally declining businesses fell to 4 percent overall (previous year: 5 percent) as a result of disposals and scaling back. The growth businesses comprise those activities that post continuous revenue increases due to sustained positive market factors and that have been identified as growth priorities as part of Group strategy. These include the digital businesses of RTL Group and Gruner + Jahr; the TV production, music business and the service businesses in the Arvato divisions of SCM Solutions, Financial Solutions and Systems; the education business and the fund activities. The structurally declining businesses comprise those activities that post sustained revenue losses due to market factors. These include in particular the gravure printing activities and the storage media replication business.
Bertelsmann achieved a 3.3 percent increase in operating EBITDA to €2,568 million in the financial year 2016 (previous year: €2,485 million), despite start-up losses for digital and new businesses. The increase in operating earnings was essentially generated by RTL Group, BMG and Arvato. The EBITDA margin of 15.1 percent was above the high level of 14.5 percent in the previous year.
Operating EBITDA at RTL Group rose 3.7 percent to €1,405 million (previous year: €1,355 million). The increase was primarily attributable to higher earnings contributions from the French and German television businesses. The French television businesses profited above all from a positive effect in connection with the gradual phase-out of the M6 Mobile contract. Penguin Random House posted lower earnings due to lower revenues. The operating EBITDA declined by 3.6 percent to €537 million (previous year: €557 million). Gruner + Jahr’s operating EBITDA increased by 4.6 percent to €137 million (previous year: €131 million), in particular thanks to a higher contribution to earnings by G+J Germany. BMG’s operating EBITDA rose by 13.1 percent to €95 million (previous year: €84 million), thanks to the continued development of the business. At Arvato, operating EBITDA grew by 14.7 percent to €359 million (previous year: €313 million). All Solution Groups posted improved earnings, particularly the service businesses for IT and SCM. Operating EBITDA at Bertelsmann Printing Group declined by 4.8 percent to €118 million (previous year: €124 million) due to the persistently declining print market and as a result of divestments. Operating EBITDA at Bertelsmann Education Group amounted to €-17 million (previous year: €-5 million). This was mainly due to planned start-up losses for further business expansion of the investments in the online education platform HotChalk and the online learning provider Udacity, both of which were acquired in the previous year. None of the investments in the fund activities grouped under Bertelsmann Investments are fully consolidated, therefore in most cases no operating results are disclosed for this segment.
|in € millions||2016||2015 (adjusted)|
|Operating EBITDA by division|
|Penguin Random House||537||557|
|Gruner + Jahr||137||131|
|Bertelsmann Printing Group||118||124|
|Bertelsmann Education Group||(17)||(5)|
|Total operating EBITDA by division||2,634||2,560|
|Operating EBITDA from continuing operations||2,568||2,485|
|Amortization/depreciation, impairments/reversals of intangible assets and property, plant and equipment not included in special items||(630)||(613)|
|EBIT (earnings before interest and taxes)||1,799||1,681|
|Earnings before taxes from continuing operations||1,555||1,451|
|Income tax expense||(419)||(346)|
|Earnings after taxes from continuing operations||1,136||1,105|
|Earnings after taxes from discontinued operations||1||3|
|Group profit or loss||1,137||1,108|
|attributable to: Earnings attributable to Bertelsmann shareholders||686||677|
|attributable to: Earnings attributable to non-controlling interests||451||431|
Special items in the financial year 2016 totaled €-139 million compared to €-191 million in the previous year. They consisted of impairment losses and reversals on impairments on investments accounted for using the equity method totaling €-4 million (previous year: €-23 million), impairments on other financial assets of €-22 million (previous year: €-17 million), adjustments of carrying amounts of assets held for sale of €-14 million (previous year: –), fair value remeasurement of investments of €12 million (previous year: €82 million), results from disposals of investments totaling €41 million (previous year: €24 million), restructuring expenses and other adjustments totaling €-152 million (previous year: €-257 million) (see also the reconciliation of EBIT to operating EBITDA in the notes to the Consolidated Financial Statements, segment information). Results from disposals of investments were particularly characterized by gains on disposals at Bertelsmann Investments.
EBIT amounted to €1,799 million in the financial year 2016 (previous year: €1,681 million) after adjusting operating EBITDA for special items totaling €-139 million (previous year: €-191 million) and the amortization, depreciation, impairments and reversals of impairments on intangible assets and property, plant and equipment totaling €-630 million (previous year: €-613 million), which were not included in adjustments.
The financial result was €-244 million compared to €-230 million in the previous year. The year-on-year deviation was attributable to a lower interest result and a lower other financial result. The income tax expenses came to €-419 million compared to €-346 million in the previous year, in particular due to the improved earnings before taxes from continuing operations. In addition, the positive special effects included in tax expenses decreased compared to the same period in the previous year. This produced after-tax earnings from continuing operations of €1,136 million (previous year: €1,105 million). Taking into account the after-tax earnings from discontinued operations of €1 million (previous year: €3 million), this resulted in a Group profit of €1,137 million (previous year: €1,108 million). The share of Group profit held by non-controlling interests came to €451 million (previous year: €431 million). The share of Group profit held by Bertelsmann shareholders was €686 million (previous year: €677 million). At the Annual General Meeting of Bertelsmann SE & Co. KGaA, an unchanged year-on-year dividend payout of €180 million will be proposed for the financial year 2016 (previous year: €180 million).