Bertelsmann Annual Results 2017

Transcription

1 Bertelsmann Annual Results Investor Conference Call March 27, 2018 Bernd Hirsch, Member of the Executive Board and CFO of Bertelsmann

2 Summary and highlights Financial year Record operating performance Revenues up organically by 1.7 percent to 17.2bn Operating EBITDA up by 2.7 percent to 2.6bn, EBITDA margin of 15.3 percent Group profit up to 1.2bn, high quality of earnings maintained Revenue share of growth businesses increased to 32 percent Further progress in strategy implementation Strengthening the core Strategic majorities in all content businesses regained, strong market positions retained Sound financial position Digital transformation Expansion of non-linear TV/Online video, Services for digital clients Growth platforms Relevant markets are sizeable, provide significant growth opportunities, and exhibit structural tailwind from digitization e.g. for online video, video production, music, E-Commerce, financial services and E-learning Growth regions 40 new investments in start-ups, further expansion of global network Solid equity ratio of 38.5 percent despite reduction of equity due to PRH transaction High cash conversion rate of 92 percent, operating free cash flow above previous year Leverage factor at 2.5x, quick deleveraging, healthy maturity profile Commitment to prudent financial policy 2 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

3 Group key figures Organic revenue growth, operating EBITDA at record level, Group profit above 1bn Revenues, in billions Operating EBITDA, in millions Group profit, in millions Organic Reported +1.7% +1.4% EBITDA margin 15.2% 15.3% % +5.4% 2,568 2,636 1,137 1, March 27, 2018 Bertelsmann Annual Results Investor Conference Call

4 Divisions Operating EBITDA increase at RTL Group, G+J, BMG and Education, higher EBIT contribution by Bertelsmann Investments Continuing operations 2016 Revenues (in billions) Operating EBITDA (in millions) 1,405 1, EBIT 141 EBITDA margin 22.5% 23.2% 16.0% 15.5% 8.7% 9.6% 22.8% 20.5% 9.5% 8.4% 7.1% 7.0% neg. 1.8% Note: 2016 restated for Arvato and Bertelsmann Printing Group 4 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

5 Group profit Group profit up by 5.4 percent, despite higher taxes due to improved operating performance in millions 2016 Change Commentary Operating EBITDA 2,568 2, Profitable growth Depreciation & Amortization (630) (657) -27 Special items (139) (83) +56 Special items reduced, benefiting from capital gains at BI EBIT 1,799 1, Financial result (244) (219) +25 Refinancing in at lower coupons Income taxes (419) (472) -53 Higher profits, burdens in connections with US tax reform Earnings after taxes from discontinued operations Group profit 1,137 1, High quality of earnings 5 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

6 Investments and free cash flow High level of cash conversion rate maintained, total investments significantly above previous year Operating Free Cash Flow, in millions Economic investments, in millions Cash Conversion Rate 93% 92% +41% 1,799 1,822 1,776 Share increases in already fully consolidated companies Purchase prices for consolidated share-holdings Investments in financial assets 1, PRH SpotX CAPEX March 27, 2018 Bertelsmann Annual Results Investor Conference Call

7 Financial status Leverage Factor in line with target, quick deleveraging after share increase in Penguin Random House Leverage Factor 2.5x Economic debt Operating EBITDA 1) Economic debt (in millions) 2.0x 2.7x 2.4x 2.5x 2.5x 6,039 5,609 5,913 6, Coverage Ratio 4.0x 10.1x 9.7x 5.9x 7.5x Operating EBITDA Financial result 1) 11.2x Net debt 2) Profit Participation Capital Operating Leases Pensions 4, ,181 1,941 1, ,238 2,698 2,140 2,000 2, ,501 1,347 1,261 1,709 1,999 1, Equity Ratio 25% Equity Total assets Credit Rating 41% 39% 41% 42% 39% Baa1, outlook: stable BBB+, outlook: stable 1) After modifications 2) Less 50% par value of hybrid bonds 7 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

8 Capital markets financing Sound financial position, maturity profile extended in, next smaller amount not due until June 2018 in millions Financing activities in FY Placement of 500m bond, term 4 years, May Placement of 50m bond, term 7 years, in July 1,440 1, Placement of 150m promissory note, term 1.5 years, in August Hybrid bonds Bonds Promissory notes 1,250 NC8* NC12* Liquidity 1,200 Syndicated loan (until 2021) Dec *For illustrative purposes only. 8 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

9 Group strategy Strategic framework since 2012 Megatrends Digitization Automation/ artificial intelligence Global growth disparities Demographic change Health Strategic priorities 1 Strengthening the core 2 Digital transformation 3 Growth platforms Target portfolio Higher growth More digital More international More diversified Financial performance Education 4 Growth regions 9 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

10 Group strategy Further progress in strategy implementation, clear priorities for upcoming years, gradual shift from M&A to organic growth and operating investments Strengthening the core Digital transformation Growth platforms 4 Growth regions Strategic priorities Improve competitive positioning and profitability of core businesses, actively drive market consolidation Build up and expand digital businesses Expand scalable growth platforms organically and through acquisitions Internationalize existing businesses further and expand fund investments in growth economies (especially BIC) Examples Integration of RTL Radio France and Groupe M6 RTL Group digital revenues of 826m as of (+23% above 2016) Fremantle Media building up drama business (e. g. American Gods) 160+ participations worldwide; Significant contribution to Group profit Share increase to 75% in Penguin Random House Acquisition of Ediciones B Streamlining of G+J portfolio Share increase to 100% in SpotX, integration of ad tech stack PRH with strong growth in audio books and progress in building direct reader relationships BMG with organic growth and acquisitions; building up of production music business Synergistic buy-and-build acquisitions at Relias Share increase of AFS in Expansion of education business in Brazil in cooperation with Bozano 10 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

11 Group strategy Progress towards target portfolio Share of Group revenues in % Higher growth More digital More international Growth businesses 20% 32% ~40% Digital 30% 46% >50% Other USA 6% 14% 7% 20% ~10% ~30% Stable businesses 64% 64% ~60% Other 70% 54% <50% Europe 80% 73% ~60% Structurally declining businesses 16% 4% 2011 Target 2011 Target 2011 Target 11 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

12 Portfolio changes Share in Penguin Random House increased from 53% to 75%, Evaluation of strategic options for Arvato CRM Solutions CRM Solutions Status quo 1) Growing, profitable business Revenues 1bn 36,000 employees 90 locations in 19 countries Leading positions, e.g. in Germany Rationale Significant investment requirements ahead Alternative investment options: eight growth platforms with higher investment priority Strategic and economic rationale Appropriate valuation, with purchase price payment for 22 percent interest amounted to 505m, plus special dividend distribution of 373m which was paid in FY Reduced dividend leakage going forward improves financial profile, increase in earnings attributable to Bertelsmann shareholders by more than 60m annually Strategic majorities in all divisions achieved Envisaged outcome Evaluation of strategic options: Sale (without France) Partial sale Partnerships Closing in second half of ) Figures without France 12 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

13 Outlook 2018 Balanced portfolio with eight divisions, continued profitable growth expected 75.1% 75% 100% 100% 100% 100% 100% 100% Media Services Education Funds Market development Macroeconomic tailwind despite increasing political uncertainty Mixed market conditions Business development Revenues increase accelerated Continued high operating profitability Group profit to remain in excess of 1bn 13 March 27, 2018 Bertelsmann Annual Results Investor Conference Call

14 Q&A-Session Investor Conference Call March 27, 2018 Bernd Hirsch, Member of the Executive Board and CFO of Bertelsmann