Bertelsmann ’05 net profit dips, nears decision on IPO
BERLIN – Bertelsmann AG, Europe’s largest media company and parent of book-publisher Random House, on Wednesday reported a dip in full-year profit and said a decision on whether to take the company public could come as soon as May.Bertelsmann – which also owns European broadcaster RTL, magazine publisher Gruner + Jahr and half of Sony BMG – said 2005 profit slipped to 1.04 billion euros ($1.26 billion) from 1.17 billion euros the year before. Sales for the year rose to 17.89 billion euros ($21.73 billion), compared with 17.01 billion euros in 2004.The Guetersloh, Germany-based company said the dip was the result of a lack of special items that lifted its results the year before, and said it was optimistic about posting similar, if not better, results through 2006.”We expect continued growth in revenues and profit – both at the group level and in each of our corporate divisions,” CEO Gunter Thielen said.”In 2005, we resolutely seized opportunities for acquisitions and fundamentally strengthened core businesses such as our TV division. We will build on this strong foundation to step up our investments in new growth markets and in emerging digital-media businesses,” he said.The company’s operating profit rose nearly 13 percent to 1.61 billion euros ($1.96 billion) from 1.43 billion euros in 2004, lifted by improved sales from Random House and Gruner + Jahr.Speaking at the company’s annual press conference, Thielen said Bertelsmann was set for a likely stock market debut later this year, adding that investment firm Groupe Bruxelles Lambert of Belgium was within its rights to want to sell its minority stake.”I can only say that we are prepared and we haven’t any problem with it at all,” he said. “Whether we are publicly listed or not, what determines our work on the executive board is that we define the right long-term strategy for Bertelsmann and that we strengthen our core businesses.”GBL holds a 25 percent stake in Bertelsmann and any decision on whether to offer its stake for sale will not come until after its own shareholder meeting May 22, said Thomas Rabe, Bertelsmann’s chief financial officer. He said Bertelsmann would react to any GBL decision.Analysts have estimated that Bertelsmann could be worth between 18 billion to 22 billion euros ($21.8 billion-$26.7 billion), though the Mohn family is expected to hold on to its majority stake.By unit, Bertelsmann said operating revenue increased across the board, led by RTL, which operates several channels in Germany. It posted an operating profit of 756 million euros ($918.09 million) in 2005, up 13 percent from 668 million euros the year before, as revenue rose 6 percent to 5.1 billion euros ($6.19 billion) from 4.8 billion euros.Sony BMG, its joint venture with Japan’s Sony Corp., posted operating earnings of 177 million euros ($215 million) last year compared with 162 million euros the year before. Revenue, however, fell to 2.12 billion euros ($2.57 billion) from 2.5 billion euros the year before, despite having sold more than 6 million copies of Kelly Clarkson’s CD “Breakaway” and releases from artists like Shakira and the soundtrack to the Johnny Cash biopic, “Walk the Line.”The company operates several labels, including Columbia, RCA, Jive and LaFace, and its artist roster also features Aerosmith, Jessica Simpson and Alicia Keys.In February, the two companies announced that Rolf Schmidt-Holtz, who had been chairman of Sony BMG, replaced Andrew Lack as CEO. Lack became chairman.The swap followed months of criticism of Lack’s tenure as CEO, including investor discontent over spiraling fees paid to artists and a scandal over copy protection software in Sony CDs.Random House’s operating profit rise 18 percent to 166 million euros ($202 million) from 140 million euros in 2004, led in part by increased sales of John Grisham’s “The Broker” and Dan Brown’s “The Da Vinci Code,” which will be released in another printing this year to coincide with the film adaptation starring Tom Hanks. Random House’s revenue rose to 1.82 billion euros ($2.21 billion), compared with 1.79 billion euros in 2004.Magazine publisher Gruner + Jahr had operating earnings of 250 million euros ($303 million) compared with 210 million euros. Revenue rose to 2.62 billion euros ($3.18 billion) in 2005 from 2.43 billion euros a year earlier.—On the Net:http://www.bertelsmann.com
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