Hamburg, 26 March 2006 – Results underscore G+J´s position as leading magazine publishing company / Revenues increased by 8 percent to ;euro;2.62 billion / Operating EBIT up 17 percent to ;euro;250 million / 16 magazines launched in Germany and beyond
Gruner + Jahr, Europe´s biggest magazine publisherand the strongest-selling German publisher, lastingly enhanced its leadingmarket position in fiscal 2005. For the first time in four years, G+J increasedits revenues and achieved significant growth in profits, managing to pull offa turnaround in a difficult market environment.
In 2005, Gruner + Jahr grew its revenue by roughly 8 percent to ;euro;2.62 billion(2004: ;euro;2.44 billion). There was an especially pleasing return to growth in thecore business. Adjusted for portfolio effects, G+J´s revenue growth amounted to1.2 percent. G+J still has the highest international revenues of any majorGerman publisher (57% of total revenue).
Profitability was lastingly improved and grew above the rate of revenue growth.Operating EBIT increased by 17 percent to ;euro;250.3 million (2004: ;euro;213.3 million).The return on sales (ROS) improved to 9.5 percent (2004: 8.7 percent).This already includes publishing investments totaling ;euro;41 million.
As a result of changes to the portfolio and the launch offensive, the number ofemployees increased greatly to 13,981 employees worldwide (2004: 11,567 employees).Adjusted for portfolio effects, Gruner + Jahr grew its headcount by two percent.
At today´s Annual Press Conference in Hamburg, G+J Chairman ; CEO Dr. Bernd Kundrundeclared: "Gruner + Jahr´s gratifying business performance in 2005 furtherunderscored its market-leading position and turned the tide toward further growth.We now have a broad and diverse portfolio of magazines in Germany and beyond thatkeeps us independent of regional market developments while also giving us afoundation for steady growth."
Gruner + Jahr will remain true to its strategy in 2006 as well, said Dr. Kundrun:"We will continue to develop our core business and focus on exploiting thepotential of our strong, established media brands. We will also continue our innovationcampaign with new titles and stay our international expansionist course. This year,too, we will tap new countries and markets wherever investment opportunitiesopen up that make strategic sense."
Chief Financial Officer Achim Twardy confirmed that the funds to do so are available:"Gruner + Jahr made good money in 2005. Despite a number of investments in the newexpansionist course, the leeway for investments has grown again. Thanks to a goodoperating performance and systematic portfolio management, the net cash from operatingactivities increased by 13% to ;euro;259 million in 2005. This year, we will again investabout two percent of our revenue in new titles and projects. Additional resourcesfor acquisitions are on hand."
In 2005, G+J launched sixteen new titles worldwide. This brings the total of newmagazines launched since the start of the innovation campaign in 2003 toforty-seven (47). G+J also reinforced its position as the most innovativejournalistic company in Germany. The publisher emerged as the big winner of thisyear´s "Lead Awards," one of the most prestigious awards for print and online mediain Germany, having scored a total of 25 medals and awards. NEON was honored as"Lead Magazine of the Year 2005," while PARK AVENUE was named "Newcomer Magazine ofthe Year 2005". VIEW won the OMG Award sponsored by the Media Agencies Organization,part of the GWA (Gesamtverband Werbeagenturen).
Bernd Kundrun declared: "We have succeeded in establishing a one-of-a-kind cultureof innovation at Gruner + Jahr. Far from being limited to special development teams,it is upheld by all employees. This makes me especially confident. Creativity and areadiness to innovate form the crucial basis for a publishing company´s future."
The portfolio saw further strategic enhancements in 2005. G+J entered new countriesand segments by acquiring the majority of shares (54.9%) in Motor Presse Stuttgart (MPS),with its more than 140 magazines. G+J has consolidated MPS´ revenues andresults since July 1, 2005.
G+J also expanded to two other growth markets in 2005: On July 1, 2005, the publishinghouse bought up 50% of the shares in the Greek magazine publisher Daphne Communications.Also with effect from July 1, 2005, G+J entered into a joint venture in Croatia withStyria Media. In a next step, the publisher plans to buy up Hubert Burda Media´smagazine operations in Croatia, Serbia and Montenegro, and Slovenia and contribute allof these titles to a joint venture with the Finnish-Dutch publisher Sanoma MagazinesInternational. The project is pending clearance by the antitrust authorities.
The formation of the PRINOVIS joint venture with arvato and Axel Springer secured thefuture of the gravure business and laid the foundation for further growth in thisfield. 50 percent of the revenue and result generated by PRINOVIS have beenconsolidated at G+J since July 1, 2005.
Meanwhile, G+J sold its U.S. magazine business in May 2005. Since there was noprospect of attaining a market-leading position in the U.S. magazine market inthe foreseeable future, the U.S. publishing operations were sold to the MeredithCorporation and the U.S. investor Joseph Mansueto at mid-year. The Brown Printingoperations were not affected by this transaction.
Overall, the portfolio adjustments were largely made without tying up additionalfinancial resources.
The Magazine Division Germany was a key contributor to G+J´s positive overallperformance in 2005. Thanks to enhanced efficiency and processes, it significantlyimproved its performance, despite the persistently difficult situation inthe advertising markets.
Numerous launches served to strengthen the G+J brand portfolio in 2005, especiallyin growing segments. A new title in the luxury segment was launched – PARK AVENUE –and HEALTHY LIVING made its debut in the health segment. By launching VIEW,G+J further enhanced the strength of the STERN brand family. Diversificationbusinesses such as BRIGITTE´s audiobook edition "Strong Voices" (roughly1.5 million CDs sold) and the BRIGITTE Edition library (approx. 1.5 million books sold)contributed to an improved market position and profitability at BRIGITTE.
STERN, BRIGITTE, and GEO continue to be reliable mainstays of revenues and profitsin G+J´s core business. An item that deserves special mention is the positiveperformance of ESSEN;TRINKEN FÜR JEDEN TAG, which increased its total circulationby more than 25 percent year on year, to over 400,000 copies, and the gratifyingrevenue development at GALA. NEON, a magazine concept unique to the German market,is winning over more and more readers, and with 160,000 sold copies made breakevenbarely 18 months after its launch.
G+J´s German websites (stern.de, brigitte.de etc.) showed a positive developmentin online advertising sales. In 2005, their cumulated ad sales put them among theTop 10 G+J ad media for the first time.
The Magazine Division France made a significant growth contribution with Prisma Presse.France´s biweekly TV titles T;Eacute;L;Eacute; 2 SEMAINES and TV GRANDES CHA;Icirc;NES continued theirgrowth trend in the distribution and ad sales market and played a key part in theimproved result generated by the French magazine business. FEMME ACTUELLE andT;Eacute;L;Eacute; LOISIRS maintained their status as the biggest revenue drivers. Thanks tosystematic brand management and a successful overhaul, FEMME ACTUELLE saw aconsiderable increase in revenues and, along with T;Eacute;L;Eacute; LOISIRS, remainsPrisma Presse´s flagship.
The people magazine GALA again posted a very gratifying rise in circulation andad sales, and a record result for 2005. VOICI stood its ground in a keenly-foughtcompetitive environment. CAPITAL bucked the trend among French business magazines,growing its circulation and increasing its result to levels well above theprevious year. PRIMA MAISON made its debut, a companion for all mattersrelating to the home.
The International Magazine Division also significantly improved its results fromcore business, especially in Austria and Poland. The titles launched in 2004 havebecome established in their respective markets and are showing excellent development.
The innovation campaign continued with the simultaneous debut of GEO in seven countries(Hungary, Czech Republic, Slovakia, Romania, Croatia, Turkey and Italy).The first-ever international edition of a G+J magazine was developed under theauspices of the central editorial office in Hamburg. Each issue is then translatedenriched with local content by a team of editors in the respective countries.MPS´ international publishing offices played a crucial part in realizing the projectby handling the production, marketing and distribution with its publishingstructures in Eastern Europe.
In Poland, G+J further reinforced its market leadership in women´s magazines bylaunching FENIKS, a psychologically inspired women´s magazine, and YOUNG MISS,a trend magazine for young women. It also introduced FOCUS HISTORIA, a monothematicseries on specific eras in history. In the Netherlands, an issue of GLAMOUR wasvery successfully launched under license, marking G+J´s entry into the upscalewomen´s magazines segment.
In Spain, GALA continued to add circulation, transcending a difficult marketenvironment. GALA BIOGRAFIA in Russia and QUEST in the Netherlands have alreadywell exceeded their target circulation.
In the Newspaper unit, the FINANCIAL TIMES DEUTSCHLAND pushed its sold circulationpast 100,000 in the year of its fifth anniversary, and continues to grow. Itoutperformed the market in terms of ad sales growth, and introduced a new supplement,ENABLE, to extraordinarily positive response from advertisers and readers.
The SÄCHSISCHE ZEITUNG and MORGENPOST SACHSEN newspapers remained very profitabledespite a sluggish market performance. Dresdner Druck- und Verlagshaus furtherstrengthened its market position in ad sales and postal delivery by acquiringthe WVD media group.
The printing division strengthened its market position despite price and costpressure from the market. Investments in the future were made at PRINOVIS,as well as in the U.S. printing operations at Brown Printing. PRINOVIS has laida cornerstone for future growth with its new plant in Liverpool, which willtake up production in mid-2006. In the U.S., Brown Printing realized an extensivereinvestment program at its Waseca plant. Brown Printing´s two biggest customers,Time Inc. and Meredith Corporation, extended their contracts by eight andfive years respectively, securing a positive future for G+J´s U.S. printing business.
For further information:
Dr. Andreas Knaut
Head of Corporate Communications + Public Affairs