Arvato: Safely through the crisis
Gütersloh, 25 March 2010 – Overall, 2009 was a satisfactory fiscal year for Arvato. In a challenging economic environment across all core markets, the media and communications services provider was not quite able to match last year’s high level of revenues, mainly due to reduced order volumes and customer bankruptcies. Arvato’s revenues for the year came to € 4,826 million (previous year: € 4,993 million), with operating EBIT at € 345 million (€ 369 million).
However, Arvato was largely able to offset the revenue losses caused by the economic crisis with new contracts and expanded services during the year under review. On the profit side, the process and cost optimization measures introduced at an early stage helped to cushion the impact of the crisis.
At year-end Arvato had 60,324 employees worldwide (31 December 2008: 62,591)
Satisfactory performance in a difficult market environment
- Revenues: € 4,826 million
- Operating EBIT: € 345 million
- 60,324 employees worldwide
"Arvato made it through the crisis in 2009 successfully and in a relatively stable condition. All of our profit centers used the year to enhance their performance, make internal processes even more efficient, attract new customers and establish innovative services on the market. Overall, we clearly improved our strategic position vis-à-vis the competition and captured additional market share in many areas," said Rolf Buch, Chairman of the Executive Board of Arvato and a member of the Bertelsmann AG Executive Board, at the presentation of the financials in Gütersloh. “Over the course of last year it also emerged that Arvato’s strategic setting is not only fertile ground for growth and capital appreciation in times of prosperity, but also has a stabilizing effect when the engine of the global economy misfires and markets come under pressure," the CEO added.
Developments in Arvato’s services businesses varied by sector and market last year. "For example, while the service center operations in France underwent further expansion, in other core markets such as Spain it was not possible to completely compensate for the effects of the crisis," said Buch. Overall, Arvato services slightly increased its worldwide revenues. The logistics network was extensively expanded in 2009; internationally through dynamic and growing supply chain management activities in China and India, and nationally through the acquisition of a provider of telecommunications logistics and the establishment of a pan-European distribution center in Gütersloh for clients in the games industry. The customer loyalty businesses increased their revenue and profits again despite falling advertising budgets, as did the global financial services. Buch expressed his particular satisfaction about the fact that new contracts were won with innovative services. A pan-European partnership for branded shops was agreed with eBay, and a global collaboration was signed with Microsoft in the promising segment of business process outsourcing (BPO). Arvato will take full responsibility for processes such as software licensing and distribution for the international software company, as well as manage the partner programs and carry out its daily invoicing with distributors and other large customers.
arvato’s printing services division captured additional market share in 2009 despite sometimes massive reductions in print runs and volumes. Business developed differently in the various countries. Buch: "While the Arvato printing plants in Germany and the US were able to hold their own relatively well, the operations in southern Europe in particular are under pressure." Moreover, Arvato printing plants expanded their value chains in 2009 and continued to push forward their development as providers of integrated print production-related services. For instance, the print group further expanded its print management business service portfolio, and with Readers Digest Inc. won its first major international customer in this growing segment. Prinovis’ business in Great Britain showed a good development, while developments in Germany were impacted by the difficult market situation and restructuring measures.
The manufacturing and service businesses related to digital storage media reported good results for 2009, on par with the previous year. "Despite the global fall in CD and DVD production volumes, we managed to further increase our market share by resolutely developing our integrated solution offerings," said Buch, citing the takeover of Universal Music Group’s central media archive and the expansion of activities in electronic software distribution (ESD) as examples. This business field was strengthened by the acquisition of Canadian technology provider Protexis, as well as through the establishment of additional Microsoft webshops in Europe and Australia.
In IT services, Arvato was able to maintain last year's good profits and launch new activities, especially in the areas of e-commerce and e-books, as well as successfully establishing platforms on the market. Buch also reported a positive performance for inmediaONE. The Arvato direct sales organization increased revenues and profits in 2009 and took over the rights to the Brockhaus brand via its wissenmedia subsidiary, including all content and inventory.
The year under review was satisfactory overall for Arvato’s Gütersloh-based companies. Mohn media, Arvato digital services and the VVA made targeted investments in new production technologies and warehouses, including in a new distribution center by the autobahn, where comprehensive logistics services have been provided to international game publishers since last summer. Says Buch: "In 2009, Gütersloh became the center of the European games industry."
The healthcare sector succeeded in winning several new customers with its comprehensive service offering, including Lundebeck, Denmark’s largest pharmaceutical company. VVA not only celebrated its 50th anniversary last year, but also numerous sales successes. The successful acquisition of new customers has also had a direct impact on the number of books and media products shipped. In 2009 a total of more than 130 million products were shipped from the logistics centers in Gutersloh and Verl - a new record.
During the current year, Arvato will work consistently and decisively to further expand its businesses. "Our goal is to return to a growth path this year and increase our revenues and earnings based on our proven strategy," said Buch, with cautious optimism. The CEO said the first projects of the current financial year have already got off to a successful start and further negotiations with potential customers are nearing completion.
In the services sector, the international networking of services and the development of BPO skills are high on the agenda. "We will also focus on further expanding our activities in the promising fields of pharmaceuticals and public administration," Buch declared. Initial successes were achieved in all areas. The takeover of Microsoft’s services has started well and the healthcare division began the New Year successfully, winning two new customers: the French pharmaceutical manufacturer Genopharm and the innovative life sciences company 5 Prime.
Mohn media will continue to integrate new services into its existing service chain in 2010. The printing business got off to a good start in the current fiscal year - despite the aforementioned difficult conditions in the printing industry. Capacity utilization is good and the expansion of the sales flyers (prospectus) business, which launched in autumn of the previous year, is in full swing. The start of production for the two new customers Netto and Real is going smoothly and preparations for assembling a new 80-page rotary press, which was specially ordered for the prospectus business, are progressing according to plan.
At Arvato digital services, the focus in 2010 will continue to be on expanding of the service portfolio, with a particular emphasis on merchandising, a field successfully entered thanks to a cooperation with the Universal Music subsidiary Deutschrock, the German market leader in the combined fan merchandising and advertising material business. Services in this segment range from the manufacture of products for fans, through warehousing and commissioning, to shipping to retail customers. Further negotiations with potential customers are nearing completion.
"Thanks to our strategy and the dedication of our managers and employees around the world, we have weathered the past year well and laid the foundations for a positive development in 2010," Buch concluded. "We have increased our efficiency in all lines of business, improved our competitive position and created the basis for offering national and international customers integrated solutions from a single source. In other words, the best possible conditions for continued success in the future.”
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