Press release

Advertising Slump Impacts Gruner + Jahr's Half-Year Results

Hamburg, 31 August 2009 – Advertising Slump Impacts Gruner + Jahr's Half-Year Results

Gruner + Jahr was unable to escape the effects of an exceedingly difficult market environment in the first half of 2009 and, as forecast earlier, reported a clear year-on-year drop in revenues and Operating EBIT. The downturn-induced decline in brand-name advertising in the core markets has led to a considerable drop in ad sales revenues. Gruner + Jahr is countering the unrelenting ad sales crisis and the resultant accelerated structural change with a comprehensive cost-reduction and restructuring program in all markets.

At ;euro;1.217 million, Group revenues for the first half of 2009 were 10.6 percent below the previous year (;euro;1.361 million). Gruner + Jahr was able to partly compensate for the decline in Group revenues caused by the ailing advertising economy through resolute cost management in all areas of the Group. The cost basis, adjusted for special items, was reduced by over ;euro;80 million in the first half of the year. Gruner + Jahr's first-half Operating EBIT, or earnings before interest and taxes, adjusted for special items, amounted to ;euro;55 million after ;euro;117 million the previous year. This means that, despite the tough market conditions, Gruner + Jahr generated ROS of 4.5 percent.

Magazine sales stayed relatively stable – especially in Germany – despite the economic downturn, declining by 4.8 percent year-on-year to ;euro;405 million (previous year: ;euro;425 million).

Overall, income from advertising for the first half declined by 23 percent to ;euro;374 million. EBIT came under strong pressure from unscheduled depreciations at G+J's Prinovis holding and other one-off items, causing G+J's EBIT for the first half to drop to ;euro;-57 million (previous year: 106 million Euro).

However, G+J remains free from financial debt and is in a comfortable cash position, i.e. financially sound and ready to invest.

Structural adjustments begin to take effect

The rebuilding of the core business began with the integration of the business media. G+J Germany successfully merged the editorial departments of its business publications CAPITAL, FINANCIAL TIMES DEUTSCHLAND, BÖRSE ONLINE and IMPULSE. Following the restructuring, all titles still produce high-quality journalism, which has even improved.

Germany's biggest editorial desk for business publications is on its way. The restructuring measures adopted by the Board have already yielded first results in many of the Group's divisions. Structural adjustments made in a decentralized manner, along with socially compatible measures such as partial retirement, hiring freezes and fluctuation without automatic replacements, have reduced staff costs at G+J worldwide by around 8 percent.

However, the measures already implemented by the decentralized units on their own are not enough to compensate for the earnings losses that have resulted from the intensifying crisis and the attendant accelerated structural changes. That is why further options for adjustment are currently being reviewed and developed around the world, to be implemented step by step and as soon as possible.

No signs of recovery in the advertising economy

Gruner + Jahr CEO Dr. Bernd Buchholz said: "Gruner + Jahr did not remain unaffected by the collapse of the advertising economy, but we responded to it swiftly and systematically by realizing considerable cost savings while maintaining a sense of perspective. We will resolutely push ahead with the next steps in our corporate restructuring without putting our quality leadership at risk. In the end, only those who offer their readers high-quality information and usefulness will be able to retain readers long-term or add new ones. Our strong brands put us in the best possible position for succeeding at this."

Commenting on where the economy is headed, Buchholz added: "We see no signs of a recovery in our core markets. So we will have to make further structural adjustments. In this process, re-inventing our core business is just as important as expanding it, especially when it comes to online marketing, Corporate Publishing and other title innovations on national and international level."

Claus-Peter Schrack
Executive Vice President
Corporate Communications
20444 Hamburg
Phone +49 (0) 40 / 37 03 - 31 13
Telefax:+49 (0) 40 / 37 03 - 56 17