Bertelsmann plans growth offensive
After years of stagnation, Europe's largest media conglomerate, Bertelsmann, wants to tap into new growth markets.
The new Group CEO Thomas Rabe announced in Berlin on Wednesday that in the future the company would invest primarily in emerging markets such as China, India and Brazil.So far, the Group still generates 80 percent of its revenues in the low-growth markets of Europe. Bertelsmann also wants to gain a foothold in the global education market. To gain additional financial leeway for the Group's restructuring, which is scheduled to take five to ten years, Bertelsmann is even considering breaking a taboo. An IPO of the Gütersloh-based family company no longer seems out of the question. Rabe announced that the Group would be transformed from a stock corporation into a partnership limited by shares (KGaA) by the end of June.
Stronger growth, more digital and more international
The new legal form allows the inclusion of new shareholders or even an IPO without diluting the influence of the Mohn family or the Bertelsmann Foundation on the Group's management, said Rabe. This would give the company the opportunity to make larger acquisitions in this way if necessary, he added. "The primary goal is to make the company stronger in terms of growth, more digital and more international," the 46-year-old manager said. To this end, he wants to direct a large part of the investment funds in the future into new businesses that have long-term growth potential, are global in nature and benefit from the trend toward digitization.
The Group's music rights business, which Rabe built up when he was Bertelsmann's CFO, is seen as a model for the planned future initiatives. The Group subsidiary, which was established together with financial investor KKR in 2008, is now number four in the global music rights market and has a music rights catalog of more than one million titles. According to the Group, it generates a "comfortable result.
Profit slump in fiscal 2011
Bertelsmann suffered a significant drop in profits last year. Group earnings fell by 6.7 percent to 612 million euros. According to the manager, this was mainly due to restructuring costs and value adjustments in the printing sector, in the production of CDs and DVDs, and in direct marketing, which led to charges in the hundreds of millions. By contrast, Group sales from continuing operations rose 1.2 percent to 15.3 billion euros.
For the current year, the Group expects a moderate increase in sales and higher net income than in 2011. (SDA/DAPD/RTD/DPA)
