PRH revenue rise helps Bertelsmann to record profitability

A strong performance from Penguin Random House, including a 4.6% rise in revenues, helped parent company Bertelsmann achieve record operating EBITDA (earnings before interest, taxes, depreciation and amortisation) of €3.1bn (£2.7bn) in the financial year 2020.

At Penguin Random House, revenues jumped from €3.6bn (£3.1bn) to €3.8bn (£3.2bn) while operating EBITDA soared from €561m (£479m) to €691m (£590).

PRH “delivered a strong publishing and business performance, especially in connection with the great worldwide success of Barack Obama’s A Promised Land, another global bestseller, after Michelle Obama’s memoir Becoming,” the report noted. UK results were not broken out.

Bertelsmann reported a 4.1% fall in revenue but group profit of €1.5bn (£1.3bn), up 34% year on year. Group revenues fell to €17.3bn (£14.8bn) from €18bn (£15.4bn). This was attributed to the pandemic’s impact on its advertising-financed and print businesses in the first half of the year. However, it said that in the second half of the year, almost all divisions were back in the black, especially in the final quarter.

The record EBITDA, up from €2.9bn the previous year, was attributed to PRH and services subsidiary Arvato, alongside capital gains from real estate sales. Group profit increased by 34% to €1.5bn (£1.3bn), its highest level since 2006.

In a letter to staff today, PRH c.e.o. Markus Dohle said the company’s pride in its performance was “tempered by our awareness of the suffering and loss that characterised last year, disrupting many industries, causing individual and social wounds, and underscoring racial injustice and economic inequality”.

He said: “Driven by content, enabled by reach, our ambition is to grow in 2021. We will continue to support our imprints’ distinct identities and cultures and we will align our reach capabilities and resources in sales, marketing, and publicity even more with a marketplace increasingly dependent on the online, e-commerce and digital channels. Online optimisation will help us grow our backlist sales significantly, which will help fund incremental investments to support our front page-making new releases and our organic growth in general. Our service-oriented approach fuels the continuous improvements in our first-class supply chain, and we will steadfastly remain a loyal and reliable partner to physical bookstores.

“Consumers who leaned on books to help them through these challenging times will likely continue to do so. It’s our responsibility to bring those readers—and new ones—the finest books and stories from the most talented and diverse authors.

“I look forward with optimism because I look forward in solidarity: with you, with readers globally, and with all those who embrace our collective responsibility to each other and to our world.”

The year saw Bertelsmann complete its full acquisition of Penguin Random House in April and announce a $2.2bn deal for Simon & Schuster. Despite investigations under way on both sides of the Atlantic into the S&S acquisition, the report said Bertelsmann was “optimistic to receive all approvals required from the competition authorities later this year”.

Thomas Rabe, chairman and c.e.o. of Bertelsmann, said: “Last year was an exceptional year, which we closed with strong results despite the corona pandemic. We recorded revenue declines primarily in the second quarter, but in the second half of the year nearly all businesses were seeing growth again. Bertelsmann achieved record EBITDA of €3.1bn in 2020, the first time it exceeded the three-billion-Euro mark. Alongside RTL Group, we have built up two other major earnings mainstays in recent years with Penguin Random House and Arvato. For the sixth consecutive year, group profit exceeded the billion-Euro threshold, this time significantly, reaching €1.5bn.”

He added: “Bertelsmann reduced costs early on in the corona pandemic and secured the company’s liquidity. Priority was given at all times to protecting our employees, many of whom have been working from home since the beginning of the pandemic. Fortunately, there were very few infections in our workplace.”