Arvato increases sales and workforce
Arvato turned in a solid performance during fiscal year 2007. In a market environment that, despite some signs of economic revival, remained challenging and was characterized by muted growth in Germany, core European markets and the United States, the internationally networked media and communication service provider raised sales by € 135 mn. to € 4.917 bn. despite negative exchange-rate effects. Higher start-up costs, one-time expenses that included Prinovis Liverpool, difficult market conditions in the intaglio and mobile services segments, in particular, as well as exchange-rate losses kept operating EBIT virtually unchanged at € 366 mn. For the first time in the company’s history, the number of employees climbed above the 50,000 threshold.
"We mastered a lot of challenges in 2007, took advantage of our opportunities and made the necessary cuts," Rolf Buch (43), CEO of Arvato and a member of the Executive Board at Bertelsmann AG, said during a telephone conference. "We are now wellpositioned to handle changing market conditions and, overall, we concluded the past fiscal year satisfactorily." Arvato invested a total of € 298 mn. in developing and expanding its business activities during the past year. Compared with 2006, the workforce increased by more than 5,000 people to 51,846 (as of Dec. 31, 2007). "The smaller portion of this increase was attributed to acquisitions, the larger share to organic growth. We have created many new jobs – including more than 1,300 in Germany," Buch said. As before, Arvato’s services segment was a key pillar of the company’s positive business development last year.
The core services businesses, which are bundled within Arvato services, posted profitable growth once again, bolstered by the continuing trend toward outsourcing. "Arvato services has strengthened and expanded its leading market position by taking such steps as acquiring the German locations of Vivento Customer Services and locations of SFR in France," Rolf Buch noted.
Arvato infoscore, an integrated service provider or data, information and receivables management, boosted sales and earnings. In addition, the project called "Würzburg integrates!" launched a partnership between public-sector officials and Arvato in Germany. "This pilot project improves service quality, simplifies processes and speeds up procedures in government agencies." In the UK, Arvato services successfully entered the "loyalty services" segment by acquiring the Moonriver Group. The direct marketing firm inmediaONE], which posted another record result for fiscal year 2007, launched the new brand Sainte Beauté and expanded the side business of direct marketing.
The printing services division, Arvato print, posted generally good results. With the exception of Spain every country division was able to increase sales. "Arvato print continued to extend the value chain, forged ahead with its transformation into an integrated service provider in the area of printing production, strengthened its market position and was able to build up 75 new workplaces in Germany alone ," Buch said.
The flagship Mohn media was able to not only increase sales but also production volumes by two digits. The printing business in the United States was successfully reorganized: Arvato print USA now comes forward as a strong group of companies offering comprehensive packages of printing services and solutions concerning the printing of books from a single source.
Prinovis, the intaglio joint venture of Arvato, Gruner + Jahr and Axel Springer AG, faced high start-up costs at its Liverpool location as well as persistently difficult market conditions. It posted substantially lower earnings as a result.
Arvato storage media / Arvato digital services
In autumn 2007, the storage media segment and parts of the services business were bundled into the new division Arvato digital services. By rounding out the existing Arvato storage media service range with additional offers, an integrated full-service provider of digital content was created. "Consequently, we are making optimal use of the operative strengths of the entire Arvato group and are responding to our customers’ desire for increasingly integrated services provided by a single source," Rolf Buch said overall, the storage media segment held its own in a difficult market environment: While developments in Europe were favorable during the reporting year, sales and earnings declined in the United States. DVD output markedly increased compared with the previous year, while CD production declined slightly amid the recent weakness in the music industry. As a result of advanced, rigorous concentration on full-service offers related to storage media, both segments outperformed the market. In the United States, the services portfolio was expanded with the
acquisition of the distribution location Pleasant Prairie, while the division strengthened its market presence in Asia by taking over a Chinese replicator.
The IT services provider Arvato systems achieved higher sales and earnings in its core business. Sales dropped at Arvato mobile. This was attributed to developments in the cellular communications market – the trend in the ring-tone business is still heading down – and the streamlining of the business portfolio with the divestment of the B2C segment handsets & service plans. The joint venture moconta was launched and was responsible for the BILDmobil rate offering, among other things. empolis recorded higher sales and earnings, and is involved in the IT project Theseus as consortium leader.
A structural change in external sales by regions could be observed compared with the previous year: As a result of the strong domestic growth and exchange-rate effects, the German share of sales rose by 4 percentage points to 45.7 percent, while the sales share of other European countries fell by 3.6 percentage points to 38.4 percent during the same period.
With more than 270 subsidiaries worldwide, Arvato is one of the biggest internationally networked media and communication services
providers. In fiscal 2007, the group of companies that is part of Bertelsmann AG generated sales of € 4.917 bn. Arvato’s worldwide subsidiaries employ more than 52,000 people. Arvato comprises the divisions Arvato print (rotogravure and offset printers in Europe and the United States), Arvato services (financial services/data management, full-service CRM services, logistics/supply chain management and direct distribution of knowledge media), Arvato digital services (e.g. replication, fulfillment, distribution/supply chain management, financial services and electronic content distribution) and Arvato systems (international provider of qualified and customized IT services) as well as empolis, a leading provider of company-wide content and knowledge management solutions, and Arvato mobile, a provider of digital entertainment content and interactive applications.
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