Bertelsmann's business was resilient during the Covid-19 crisis in the first half of 2020

 

By Emmanuel Legrand

 

German media conglomerate Bertelsmann posted a slight decline in revenues during the first six months of 2020 to €7.8 billion, down 8.9% on the same period of 2019, while operating EBITDA reached €1bn and group profit stood at €488m, near previous-year's level. Such was the report card from the Gütersloh-based company, taking into account some four months of activities during the Covid-19 lockdown. 

  Bertelsmann said that in the Corona-dominated first half of 2020, it "benefited from its diversified business portfolio and high share of digital businesses."

   Music division BMG as well as Majorel, Arvato Supply Chain Solutions, Arvato Financial Solutions, and the Bertelsmann Education Group, "developed positively," but advertising-financed businesses such as TV division RTL Group and publishing unit Gruner + Jahr as well as the printing businesses "clearly felt the effects of the corona pandemic." The company added that "thanks to the Corona countermeasures, more than 60% of the revenue decline was offset on the cost side, and the economic debt was reduced."

 

Gradual recovery of the ad market

  "The first half of 2020 was dominated by the global corona pandemic," said Thomas Rabe, Chairman and CEO of Bertelsmann. "We started the year well, but since March we have been feeling the economic impact of the pandemic – especially in the advertising markets. In this situation, Bertelsmann benefits from its broad corporate portfolio and high proportion of digital business models. The declines in advertising revenues were offset to a considerable extent by the flourishing book-publishing, music, Arvato services, and education businesses in particular, but also through active cost- and cash-flow management."

  Music division BMG "continued to benefit from the growing global demand for music streaming, and increased the share of digital business in its total revenues." BMG saw revenues across its recording and publishing divisions grow 4.8% year-on-year during the period, at €282m. BMG’s operating EBITDA was flat at €49m. BMG's share of digital revenues reached 59% during the period, up from 56% for the same period a year ago. 

 

  For the rest of the year, it is expecting a gradual recovery of the advertising markets as well as strong performances from its subscription-driven businesses. "Bearing in mind the high degree of forecasting uncertainty, revenues and operating earnings, excluding the TV and magazine businesses, should reach the previous year's levels," said the company in its financial filing.