Bertelsmann Investor update

Size: px

Start display at page:

Download "Bertelsmann Investor update"

Kelley Bryant
5 years ago
Views:

1 Bertelsmann Investor update March/April 2011 Dr. Thomas Rabe, Member of the Executive Board, CFO Dr. Roger Schweitzer, EVP Corporate Treasury and Finance Henrik Pahls, SVP Corporate Finance

2 FY 2010: summary and highlights Operating performance significantly improved, expectations exceeded Outlook 2010 (April 2010)» Economic stabilization» Continued optimization of core businesses, continued portfolio review» Revenues and operating EBIT at previous year s level, significant increase in net income» Focus on cash flow, continued debt reduction FY 2010 actual» Recovery of advertising markets, in particular TV» Operations and portfolio optimized (Five, DG), profitability at record level: EBITDA Margin 15.2 percent, Return on Sales 11.7 percent» Revenues up by 4.5 percent, organic growth >3 percent; Record Operating EBIT of 1.9bn, Net income 656m, up by 621m» High cash conversion rate, Free operating cash flow of 2.1bn, significant debt reduction by more than 1.1 bn; Leverage factor at 2.3 2

3 Agenda Group key figures Divisional key figures Financial status Business strategy 5 Outlook 3

4 Group key figures Significant revenue growth, key figures at record level in millions 2009 Change 2010 Revenues 15, % 15,786 Operating EBIT 1) 1, ,852 Operating EBITDA 2, ,400 Net income BVA Operating free cash flow 2) 1, ,075 Cash conversion rate 2) 125% -13%-P. 112% Net financial debt -2, ,913 Economic debt -6,024 1,109-4,915 Leverage factor ) Earnings before interest, taxes and special items (especially impairments and restructuring expenses) 2) Adjusted for one-time effects 4

5 Group key figures Revenues diversified by source and region Revenue sources (previous year) Revenue by regions (previous year) Direct-to-consumer 11.4% (12.9%) 26.4% (25.1%) Advertising Other countries U.S. 5.5% (4.8%) 13.4% Germany (12.7%) 34.9% (35.6%) Services 37.5% (36.9%) 24.7% (25.1%) Content Rest of Europe 46.2% (46.8%) 5

6 Group profit High group profit due to better performance and lower level of special items in millions 2009 Change 2010 Operating EBIT of divisions 1, ,936 Corporate/consolidation Operating EBIT 1, ,852 Special items Thereof - Restructuring costs Impairments Others Capital gains/losses EBIT ,496 Financial result Income taxes Earnings from discontinued operations Group profit

7 Cash flow High operating cash flow in line with profitability in millions Cash flow from operating activities 1,777 2,052 Taxes paid Investments in intangible and tangible assets Proceeds from the disposal of intangible and tangible assets Restructuring payments Operating free cash flow 1,763 2,103 One-time effects 8-28 Operating free cash flow (adjusted for one-time effects) 1,771 2,075 Cash conversion rate (adjusted for one-time effects) 125% 112% 7

8 Agenda Group key figures Divisional key figures Financial status Business strategy 5 Outlook 8

9 Market environment & expectations TV: normalization; magazines: stabilization; print: weakening Division Business area Market expectations 2010 Market trend 2010e Market expectations 2011 TV Germany: +9% France: +10% Netherlands: +11% Germany: France: + 2-3% Netherlands: Book U.S.: +1% UK: -3% Germany: +1% U.S.: UK: + 0-1% Germany: Magazines Germany: A: -3%; C: -1% France: A: -3%, C: -2% Spain: A: -8%, C: -4% Germany: France: Spain: A: % C: - 0-3% Print Comm. Printing Europe: +2% Book Europe: ±0% Print: ±0% Digital Services 1) High-tech logistics, ESD: +15% Replication: -8% High-tech Logistics, ESD: +12% Replication: -3% Logistics / B2B services Marketing serv.: SCM Infoscore: % Marketing serv.: SCM: Infoscore: + 6-8% 1) Replication business only A = Advertising revenues C = Circulation revenues 9

10 RTL Group Strong Performance due to recovery of advertising markets across Europe Europe s leading entertainment network Record results driven by market recovery, cost discipline and audience performance Average daily linear TV viewing per day increased Revenues in millions 5,208 5,389 5,156 5, min 2009 Source: Médiamétrie, TNS Sofres, Ofcom, AGF/GfK 227 ESP UK 212 GER FRA Operating EBIT in millions Young people adopt adults TV behavior In minutes per day GER UK FRA , yo Source: AGF/GfK, Mediametrie, BARB 10 years of age = +85 min TV consumption yo

11 Random House Massive growth of ebooks: sales increased by 250 % in 2010 World s largest trade book publishing group Overall book market is expanding through ebooks Lower author advances, full write-off of Borders receiv. High marginal profitability Units growth for RH US in units millions % % 16% Digital Physical Online Revenues in millions 1,837 1,721 1,723 1, Operating EBIT in millions % Bookstores % Mass Merch % Special Market/Other

12 Random House Increased availability of devices fuels sale of ebooks In 2011, Random House adopted agency model Monthly ebook sales in the US in millions (12 months rolling average) $10 $8 $6 $4 $2 Growing ebook market provides many upsides: Diversified retail landscape / e-platforms entering the market High marginal profitability Low piracy level +239% Google ebookstore launch New Kindle 3G ships in September Apple ipad launch B&N Nook & new Sony Reader ship Sony releases 2 new devices B&N ebook store launch Kindle 2 ships Dec 07 Dec 08 Dec 09 Dec 10 12

13 Gruner + Jahr Significant improvement in profitability, margins more than doubled from 4.5% to 10.7% Europe s biggest magazine publisher Recovery of advertising markets not as strong as in television Profits in FY 2010 mainly driven by cost control Attractive cash flow profile, optimized tax position Expecting market share gains, focus on leading magazines (Stern, Spiegel, Brigitte, Gala, Geo, AMS) Emergence of e-magazines / apps, enhancing attractiveness of magazines Revenue mix in core markets G+J Germany G+J France Other 14% Advertising 44% Other 8% Advertising 33% Revenues in millions 2,831 2,769 2,508 2, Operating EBIT in millions % Circulation 59% Circulation

14 Arvato Continued transformation into a provider of integrated market solutions, revenues above 5 bn Leading media and communication service provider Focus on b2b business, relevance of print decreasing Long standing customer relationships, reputable clients Ongoing reduction of asset base in print, replication Growth primarily organic Revenues Services Print 38% 40% 36% 2.9 bn 52% 5.0 bn Replication 22% Operating EBIT 12% 1) (6%) 1) print services Revenues in millions 4,917 4,993 4,826 5, Operating EBIT in millions % 29% 31% 0.2 bn 58% 0.4 bn 26% 11%

15 Arvato services Integrated operations offer unique set of services, top tier clients CRM Consulting Direct Marketing, Loyalty Programs, Customer Care Data Management Lettershop Addresses & Marketing-Data, Data Mining & Scoring, Address maintenance, Campaign-management, Response Management Marketing Mails, Postal charges management, Shrinkwrapping, Card production Customer Service Logistics Finance Inbound / Outbound, Customer-service, Telesales, Technical support, Back-Office Services, Retention, E-Shop solutions Stock management, Transport-optimization, Pick & Pack, Customs Handling, Online tracking of shipment, Awardand prize-shipment Factoring, Credit assessment, Receivables collection After Sales Repair, Spare-Parts Logistics, Reverse Logistics 15

16 Direct Group Positive operating EBIT, active re-dimensioning continues Media clubs and stores, as well as direct sales Re-dimensioning of Direct Group businesses has continued in FY 2010 Envisaged sale of Direct Group France currently negotiated with a private US investment company Remaining businesses located in Germany, Czech Republic and Ukraine Revenues in millions 1,308 1,396 1,246 1, France Other Germany Year Portfolio measure Revenues sold, m 2008 Direct Group NA Clubs UK, NL, CN Direct Group Italy, Port Direct Group Spain Direct Group France* Direct Group Poland 25 1,908 * in negotiation Operating EBIT in millions

17 Divisional CCR, BVA High cash conversion rate throughout the group, Group BVA substantially improved RTL Group Random House Gruner + Jahr Arvato Direct Group Total Group Cash Conversion Rate in percent BVA in millions

18 Group key financials summary Business in a growing, profitable and financially sound shape in millions ) Change 2010 vs Revenues 15,864 15,110 15, % Operating EBITDA 2,130 2,000 2, % EBITDA-Margin 13.4% 13.2% 15.2% +1.8%-P. Operating EBIT 1,582 1,438 1, % ROS 10.0% 9.5% 11.7% +1.7%-P. Economic Debt 6,627 6,024 4, % Leverage factor Net financial debt / EBITDA Business and financial profile significantly improved over the past two years 1) excluding FIVE 18

19 Agenda Group key figures Divisional key figures Financial status Business strategy 5 Outlook 19

20 Financial strategy Prudent financial policy defined in Executive Board guidelines on corporate financing Rules for corporate financing Preamble The financial targets should ensure a balance between financial risk, return on equity and growth. Group financing should be specifically oriented towards the requirements for attaining a BBB+/Baa1 rating. Financial targets at a glance Rating (Moody s / Standard & Poor s) Baa1/ BBB+ Interest coverage ratio (Op. EBITDA LF / net interest expenses) 4.0x Leverage factor (Economic debt LF / Op. EBITDA LF ) 3.0x Equity ratio (Group equity / total assets) 25% 2.5x Compulsory deleveraging If limits are exceeded, management must present a plan designed to ensure that limits are achieved again within a maximum period of three years. Leverage factor limit lowered to 2.5x to improve financial profile 20

21 Financial status All key ratios met, significant debt reduction in FY 2010 Leverage Factor < 2.5x Economic debt (in millions) 3.4x 3.1x 3.2x 3.2x 2.3x 10,623 HY Interest Coverage Ratio > 4.0x 6.2x 5.0x 4.7x 4.4x 4.1x Equity Ratio > 25% 35% 29% 28% 31% 31% Net debt 7,995 4,582 7,720 4,282 PPC Pensions Operating 1,472 1,558 Leases 1,235 1, ,627 3,445 6, ,409 1, ,793 1,406 1, BBB, stable Outlook 4,915 1, ,565 1, Baa2, stable Outlook 21

22 Financial status High liquidity position despite redemptions in millions 149 4,878 gross debt 2,052 1,318 2, ,006 3,919 gross debt 2009 Cash flow from Operations Investing activities PPC buyback, redemptions Interests, others Dividends 2010 Sufficient liquid funds for maturities in 2012 (476 m), 2013 (200 $m) and 2014 (1,245 m) 22

23 Maturity profile Well diversified, liquidity partly used for repurchases in millions US Private Placement Promissory Notes Bonds Cash 2,006 1, , Average maturity of capital market debt is 3.9 years, average coupon of 5.3% 23

24 Pensions Pension provisions increased primarily due to interest rate development in millions Defined Benefit Obligation 1) -2,695 Obligations similar to pensions 2) , , , Gross liability recognized in the balance sheet -2,834-2,338-2,423-2,698 Fair value of plan assets -1, ,020 1,137 Net liability recognized in the balance sheet -1,552-1,408-1,403-1,561 Other assets Provisions for pensions and similar obligations -1,558-1,409-1,406-1,565 Discount rate (domestic) 4.0% 4.6% 5.3% 6.0% 6.0% 5.3% ) Incl. healthcare costs USA 2) Partial retirement programs, employee service anniversaries, severance payments at time of retirement (primarily Italy, Austria) 24

25 Operating Leases Development and allocation, mostly land and buildings NPV, in millions 1, Leases by nature Satellite transponders Others 11% -91 1,024 84% Land & Buildings Leases by divisions Direct Group Corp. Center Arvato RTL Group 2009 Curr. Interest Other 1) 1) Scope (deconsolidation of Five EUR -36m), shorter residual term, balance of ending and new contracts 2010 G+J Random House 25

26 Agenda Group key figures Divisional key figures Financial status Business strategy 5 Outlook 26

27 Strategic assessment Competitive positions improved, businesses in challenging position largely divested Strategic Analysis 2008 Strategic Analysis 2009 Strategic Analysis 2010 Market attractiveness 5 Key battles Growth priorities Hard to sustain Profit engines Competitive position Ø Market attractiveness Ø Competitive position Key battles Growth priorities Revenues shares 4% Hard to sustain 17% 30% Profit engines 49% 0% 8% 19% 73% 0% 4% 41% 54% 27

28 Optimizing operations - Core business strengthened continuously, especially during financial crisis in billions Compensation rate = costs / revenues Adjusted compensation rate 92% Material Advertising, sales Admin Personnel Total RTL Group Random House G+J Arvato Direct Group Corporate Total savings of approx 1bn achieved in FY 2009, high compensation rate 28

29 Portfolio optimization Major divestments Year Portfolio measure Revenues sold 2007 BMG Recorded Music 2007 RTL Shop 2007 GB III, FiS, Emotion 2008 Direct Group NA 2008 Clubs UK, NL, CN 2008 Mobile, empolis 3.2 bn 2008 G+J Russia 2009 Direct Group IT, PT 2009 RH Korea, Japan 2010 Direct Group ESP (JV Planeta) 2010 Five 29

30 Portfolio development Focus on four segments 1. Education New business segments 2. E-commerce / Online services / Energy efficiency services 3. Professional Information Services 4. Music Rights Management 30

31 Agenda Group key figures Divisional key figures Financial status Business strategy 5 Outlook 31

32 Outlook Continued stabilization expected in 2011 Outlook FY 2011» Economic stabilization» Revenues above previous year» Continued optimization of core businesses and portfolio review» Return on sales in the range of 11 percent» Group profit to exceed previous year s level» Focus on cash flow and target rating 32

Bertelsmann Annual Results 2009 Investor Conference Call

Bertelsmann Annual Results 2009 Investor Conference Call March 23, 2010 Dr. Thomas Rabe, Member of the Executive Board and Chief Financial Officer, Bertelsmann AG Summary and highlights Solid performance