Two years of cutbacks bear fruit

COLOGNE — Bertelsmann hiked operating profit 20% in 2003, although sales and net results fell due to special factors and a weakening dollar.

CEO Gunter Thielen said Tuesday that two years of cutbacks to the core business had borne fruit. “All corporate divisions are profitable, and our finances are in order,” he said. “The current year has already shown promise, and we expect Bertelsmann to continue to increase its operating results.”

Sales fell 8.3% to E16.8 billion ($20.5 billion) due to the sale of trade publication unit Bertelsmann Springer and an unfavorable dollar-euro exchange rate.

For that same reason Bertelsmann’s share of sales in the U.S. dropped from 27.5% to 25.1%, while European countries outside Germany lifted their share from 35.5% to 38.6%.

Net profit fell to $254 million after it reached $1.18 billion in 2003, boosted by the sale of Bertelsmann’s shares in AOL Europe.

Back on track

Still, finance chief Siegfried Luther said the company had performed according to plan, upping operating profit to $1.37 billion from $1.17 billion.

“In 2003, thanks to our successfully concluded strategy of consolidation, we again met all our financial targets, more rapidly and distinctly than planned,” he said.

He noted that the operating return on sales in 2003 reached 6.7%, after an increase from 3.0% to 5.1% in the previous two years.

Company kept a tight rein on investments, totaling $982 million in 2003, down from $6.5 billion in 2002, when it took over music label Zomba and a 22% stake in RTL Group. A major acquisition in 2003 was the takeover of German publisher Heyne by Random House Group.

Bertelsmann also announced it has now achieved its targeted shareholder structure, after buying back the last tranche of shares that had remained with Zeit Foundation, originally scheduled for 2005.

Shareholders now are the Bertelsmann Foundation with 57.6%, the Mohn family with 17.3%, and Groupe Bruxelles Lambert with 25.1%.

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