Bertelsmann’s primary objective is continuous growth of the company’s value through a sustained increase in profitability with efficient capital investment at the same time (see the “Value-Oriented Management System” section).

Bertelsmann aims to achieve a faster-growing, more digital, more international and more diversified Group portfolio. Businesses in which Bertelsmann invests should have longterm stable growth, global reach, stable and protectable business models, high market-entry barriers and scalability. The education business is being gradually developed into the third earnings pillar alongside the media and service businesses. The Group strategy comprises four strategic priorities: strengthening the core businesses, driving the digital transformation forward, developing growth platforms and expanding into growth regions. In the financial year 2017, Bertelsmann continued to make progress in line with these strategic priorities.

Among other things, merging RTL Radio France with Groupe M6 helped to strengthen the core businesses. Bertelsmann also acquired a further 22 percent stake in Penguin Random House from the co-shareholder Pearson and now holds a strategic three-quarters majority in the world’s largest trade book publisher based on revenue. Penguin Random House strengthened its market positions in Spain and Latin America with the acquisition of the Ediciones B publishing group. Gruner + Jahr continued to focus strongly on Germany and France by selling off the businesses in the Netherlands and China and discontinuing the international businesses of Motor Presse Stuttgart. Arvato Systems acquired the software provider Next Level Integration, which specializes in the energy industry, and Vidispine, a company specialized in the media asset management sector. The “future package” for the German gravure printing business that was decided in 2017 is designed to cut costs and safeguard the three gravure printing locations in the medium term.

The digital transformation of the businesses also continued. RTL Group expanded its advertising technology business through the acquisition of the remaining shares in the programmatic video advertising company SpotX and the stronger integration of individual businesses into an extensive advertising technology platform. Penguin Random House expanded its range of products for targeting readers directly and grew its audio downloads business. Gruner + Jahr achieved growth in the German digital business.

Among other things, the growth platform Fremantle Media expanded its drama business through new productions such as “American Gods,” undertook further investments and entered into further talent deals. BMG acquired the country label group BBR Music Group, made further investments and signed many new artists. Arvato SCM Solutions expanded its logistics network in Germany, the Netherlands, Poland and the United States and achieved growth primarily though customers in the e-commerce, high-tech, entertainment and healthcare sectors. Arvato Financial Solutions acquired a stake in the fintech start-up Solaris Bank. In education, Relias achieved strong organic growth and acquired WhiteCloud Analytics, a company providing analyses and performance management in the hospital sector. Udacity posted strong growth with existing and recently introduced Nanodegrees.

In the growth regions, Bertelsmann further expanded its global network of start-up investments. During the reporting period, the company made over 40 new investments worldwide through the funds grouped under Bertelsmann Investments. In China, the Bertelsmann Asia Investments fund made various new and follow-up investments, achieved further significant value growth and made a considerable contribution to Group profit in particular through gains from disposals of investments. In India the Bertelsmann India Investments fund invested in the education provider Eruditus. Arvato CRM Solutions acquired the IT and analytics company Ramyam. In Brazil, the Bertelsmann Brazil Investments fund and its partner Bozano Investimentos continued their establishment of a network of universities focusing on education in the healthcare sector. Arvato Financial Solutions increased its stake in the financial services provider Intervalor.

Bertelsmann will push ahead with its ongoing transformation in 2018 in line with the four strategic priorities. Compliance with and achievement of the strategic development priorities are continuously examined by the Executive Board at the divisional level through regular meetings of the Strategy and Business Committee and as part of the annual Strategic Planning Dialogue between the Executive Board and the Supervisory Board. In addition, relevant markets and the competitive environment are analyzed on an ongoing basis in order to draw conclusions concerning the further development of the Group’s strategy. The Executive Board is also supported by the Group Management Committee on issues of corporate strategy and development. This Committee is composed of executives representing key businesses, countries, regions and select Group-wide functions.

The Group’s content-based and entrepreneurial creativity will remain very important for the implementation of its strategy. Bertelsmann will therefore continue to invest significantly in the creative core of its businesses. In addition, Bertelsmann needs to have qualified employees at all levels of the Group to ensure its strategic and financial success. Innovation competence is also very important for Bertelsmann and is a key strategic component (see the “Innovations” section).