Press release

Gruner + Jahr: Significantly improved market performance and lasting structural improvements yield outstanding results in first half of 2010

Hamburg, 31 August 2010 –

improved first-half market performance in the key core markets and the structural measures successfully implemented during the previous year, which as expected developed their full and sustained effects during the first half of 2010, Gruner + Jahr recorded an outstanding result, well above pre-crisis levels, for the first half of 2010.

Hamburg, 1st September 2010
As expected, Gruner + Jahr's consolidated revenues stabilized in the first half of 2010, precisely on par with the previous year at ;euro;1,217 million. The good performance of the second half of 2009 was maintained in 2010. Gruner + Jahr significantly improved its first-half earnings vs. the previous year, as well as compared to the pre-crisis results of H'1/2008. Earnings before interest and taxes, adjusted for special items (operating EBIT) came to ;euro;130 million after ;euro;55 million in 2009 and ;euro;117 million in H'1/2008. Although market conditions continue difficult in some countries, G+J generated ROS of 10.7%, compared to 4.5% in the crisis-ridden year of 2009 and 8.6% in 2008.

Sales revenue – particularly in Germany – remained relatively stable and decreased by 4.9% to ;euro;385 million (previous year: ;euro;405 million, 2008: ;euro;425 million). First-half advertising revenues developed differently in the various countries. G+J was able to add significant market share in the German ad sales business. Worldwide advertising revenues rose by ;euro;374 million in the first six months of 2009 to ;euro;382 million in the first half of 2010. This represents an increase of +2.1%.

After special items and one-off effects, Gruner + Jahr achieved EBIT of ;euro;125 million in the first half of 2010 (previous year: ;euro;-57 million, 2008: ;euro;106 million). Gruner + Jahr has clearly returned to profitability with this result and has exceeded the result of the pre-crisis year of 2008. Thus G+J is well equipped for the challenges of the future. G+J is also free of debt, has a comfortable cash position, and is financially sound and ready to invest.

Structural adjustments show lasting effects
As planned, the national and international reinvention of the core business initiated in fall 2008 is now showing its full and sustained effects. The precisely targeted measures, implemented in a decentralized manner, have resulted in a significant reduction in the cost basis without sacrificing the quality or relevance of the journalistic products, either in print or online. The publisher's magazines and newspapers are in excellent shape and their journalistic content is at the highest level. The adjustments made to the magazines, such as improved design and layout in many parts of the portfolio, as well as the magazine launches of 2010, clearly show that G+J continues to invest in its core business just as before, and is maintaining the quality of its journalism. Its above-average earnings in the first half of 2010 enable G+J to continue investing in defined growth areas. For instance, the Group successfully advanced the expansion of corporate publishing, online marketing and its involvement in China during the first half of 2010. More than 45 new corporate-publishing customers have been won in the past 12 months, both in Germany and internationally.

In the digital sector, besides expanding its online marketing business, G+J continues to rely on its strong brands and their relevant online content. Gruner + Jahr is also working on innovative new formats for next-generation tablet devices, such as the iPad. The first few G+J brands are already represented on the iPad in Germany and internationally. The "online newsstand" announced by our DPV distribution subsidiary and Bertelsmann Direct Group will be launched this fall. All these activities continue to have the objective of ensuring the refinancing of high-quality journalistic content on the Internet with a mix of different revenue models.

Basis for future growth created
Gruner + Jahr CEO Dr. Bernd Buchholz says: "Gruner + Jahr has very systematically and successfully completed the necessary restructuring. The fact that the measures implemented in 2008 and 2009 are now demonstrating their full effects in the first half of 2010 shows that we are on the right track. They form the basis for the further implementation of our strategic objectives. We will focus on the continued expansion of our existing activities, such as corporate publishing, online marketing and the China business. In addition, we are fully on plan with the recently announced establishment of a new core business in the professional publishing segment. By reinventing the existing core business, expanding defined growth areas and building an additional line of business, we expect to grow both our sales and our earnings in the long term."

On the subject of economic developments Buchholz adds: "We are currently seeing different market developments in our core markets. Germany and Austria are showing solid growth, in France the market has stabilized, in Spain some market segments are rallying, while Eastern Europe remains a difficult overall market environment. China is doing brilliantly with double-digit growth rates. We are very confident that G+J will continue the good performance of the first six months in the second half of the year."

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