Company plans to rein in investment.
German media company Bertelsmann AG reported an 8.5 percent in first-half net profit Wednesday (Sept. 6) and said it would rein in investment following a period of acquisitions. The results came as Bertelsmann revealed it had signed a deal to sell BMG Music Publishing Group to Vivendi for 1.63 billion euros ($2.09 billion).
The privately held company earned 243 million euros ($311.3 million) in the six months through June, compared to 224 million euros in the same period a year earlier. Sales rose 15 percent to 9.1 billion euros ($11.66 billion) from 7.9 billion euros in the first half of 2005, the company said. CFO Thomas Rabe confirmed that Bertelsmann was forecasting revenue and profits growth of 10 percent for 2006.
Bertelsmann’s BMG division, which includes its 50% stake in Sony BMG and its newly-sold BMG Music Publishing unit, saw its operating EBIT plunge 96% to €2 million ($2.5 million), down from €48 million ($61.6 million) the same time a year ago. Revenues fell 6.7% to €888 million ($1.1 billion) down from €952 million ($1.2 billion) during the same period. Betertelsmann attributed the drop to a “significant decline in the recorded music business that is the result of market deterioration and the delay of key releases to the second half.” Sony BMG’s digital business doubled over the last year and accounts for about 13% of the company’s total revenue.
The Guetersloh-based company, which owns or controls a range of media companies including RTL Group, Europe's largest broadcaster, and publisher Random House, said it planned a "restrained" investment approach until the end of 2007.
Bertelsmann said the sale of the publishing unit would help pay back the 4.5 billion euros ($5.76 billion) in debt incurred to finance the repurchase of the 25 percent stake in the company that was held by Groupe Bruxelles Lambert.
First-half operating earnings before interest and taxes grew 8.9 percent to 701 million euros ($898 million) compared with 644 million euros for the same period in 2005.
RTL Group was the main contributor to growth, boosting operating earnings before interest and taxes by 26 percent to 471 million euros ($603.35 million) in the first half, compared with 371 million euros in the first half of 2005.
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