German media corporation Bertelsmann yesterday announced a 63% increase in earnings for 2002 but profits slipped as a result of the costly acquisition of record label Zomba.
According to its annual report, net income at Bertelsmann fell to €928 million from €1.24 billion in 2001. This came despite an rise in operating EBITA from €573 million to €936 million. Sales were down 3.5% at €18.3 billion.
Bertelsmann paid €2.74 billion for Zomba last autumn but has now written off €1.3 billion of that investment. Accordingly net debt tripled to €1.8 billion but the company has embarked on a cost cutting programme that is starting to pay dividends.
“Bertelsmann has focused its energy on the core businesses, cut its losses, and markedly increased its profitability,” said chairman and CEO Gunter Thielen. “We earned significantly more than in 2001 in our operating businesses and have stood our ground in a difficult economic situation.”
Thielen also moved to dismiss speculation that the Mohn family, which owns 75% of the company, was embroiled in a power struggle with management (see New Battle For Power At Bertelsmann) and delivered an upbeat prognosis for the coming year.
“For 2003, we expect stable group revenues and a further increase in the operating result despite a persistently difficult economic environment,” he said.
