Letter from the CEO

Dear Readers,
Dear Friends of Bertelsmann,

Thomas Rabe
Chairman and CEO of Bertelsmann

2017 was a good year for Bertelsmann. We again increased our revenues and results, and made further progress in executing our strategy. The goal is to give our company a faster-growing, more digital, more international and more diversified setup. This direction is documented in the present Annual Report.

Supported by organic growth of 1.7 percent, our revenues increased to €17.2 billion. The share of revenue generated by the growth businesses we established and expanded in recent years improved to 32 percent (previous year: 30 percent); organically, these businesses grew by 5 percent in 2017.

Operating EBITDA reached a new high at over €2.6 billion; earnings growth was achieved in particular by RTL Group, BMG and the Bertelsmann Education Group. At €1.2 billion, Group net income again exceeded the high level of the previous year.

One highlight of 2017 was the expansion of our shareholding in the world’s largest trade book publishing group, Penguin Random House. The book publishing business has been part of our company’s identity for more than 180 years. After this transaction, we now own strategic majorities in all our divisions.

To strengthen our core businesses, RTL Group’s families of channels renewed key programming contracts – such as Formula 1 in Germany, and the broadcasts of the FIFA World Cup matches in France – and expanded its advertising market shares in both countries. Gruner + Jahr launched new magazines, such as “Hygge.” Arvato renewed its contracts with important customers, and the Bertelsmann Printing Group’s operations saw good capacity utilization over the course of the year.

We continued to invest in the digital transformation of our businesses. RTL Group fully acquired the ad-tech provider SpotX and, with its overall digital activities, generated revenues of around €826 million in 2017, a year-on-year increase of 23 percent. Gruner + Jahr’s digital revenues also saw considerable growth in its core markets, Germany and France. Arvato recorded growth in its services to clients in the digital domain. Bertelsmann’s companies now reach more than 2.4 billion followers worldwide with their social media offerings.

Our growth platforms are now so strong that we will increasingly develop them organically in the future. Fremantle Media recorded international audience successes in 2017 with the series “American Gods.” BMG acquired the BBR Music Group and signed renowned artists, and Arvato continued to expand its e-commerce and financial services. Our e-learning subsidiary Relias grew organically and through acquisitions, while the Udacity online education platform increased its number of students thanks to new Nanodegrees.

In our growth regions, our funds made various investments in innovative companies; Bertelsmann now owns stakes in more than 100 companies worldwide. In Brazil, Arvato increased its stake in the financial services provider Intervalor.

All these activities are an expression of the commitment and dedication of our employees around the world. Their entrepreneurial spirit and your creativity will continue to be the driving forces that empower us to continue on our successful path.

I look forward to your continued interest in our company’s progress and performance.