For arvato AG the 2004 fiscal year took a satisfactory course in spite of difficult economic background conditions, unfavorable exchange rates and additional burdens caused by increased raw materials prices. The internationally networked media service provider was again able to increase both sales revenues and the operating result. Here are the figures in detail: Sales rose from € 3.64 billion in 2003 to € 3.76 billion. EBIT went up by € 49 million to € 310 million. "These figures show that our three-dimensional growth strategy is working. It is particularly gratifying to see that all the business units of arvato have made a contribution to the improvement of earnings," says Hartmut Ostrowski (47), Chairman and CEO of arvato AG and member of the Bertelsmann AG Executive Board, at the annual press briefing of the internationally networked media service provider in Gütersloh. Return on sales climbed to 8.3 per cent. In the previous year this ratio had still been at 7.2 per cent. The group of companies invested € 369 million in the build-up and expansion of the businesses last year which was € 145 million more than in the year before. The number of employees went up by more than 2,400 to a new total of 33,813 (as at 31 December 2004).
Once again vigorous growth was reported by the arvato services division consisting of arvato direct services, one of the world's leading service providers of Business Process Outsourcing, and arvato logistics services, an international provider of integrated Supply Chain Management solutions. Ostrowski: "Major reasons for the increase of earnings in the services business by more than 24 per cent were the renewed push towards the internationalization strategy, the vigorous expansion of the direct marketing, call center and address management activities, the successful acquisition of new customers as well as the integration of new services in the value chain."
arvato services
Fiscal year 2004 showed again that the trend towards outsourcing continues unabated. It was above all the service business of arvato that benefited from this development. "In the previous year multilingual service centers for international clients were opened and/or expanded in cities like Istanbul, Poznan, Stettin, Bergamo, New Delhi and Dublin," says Ostrowski giving some examples of arvato's expansion into new markets. "Over and above this we have developed new services for our customers, like for example international billing solutions, and we have assumed complete process chains for different customers." Another engine for the sustainable growth in the last fiscal year was the takeover of service companies in different countries according to the comments made by Ostrowski. Thus, arvato expanded its leading position in the French speaking market by taking over a majority shareholding in the Moroccan call center service provider Phone Assistance and assumed the market leadership in the areas of Printing, Mail and Fulfillment in Belgium by buying the direct marketing company Vicindo. The arvato subsidiary AZ Direct which offers its customers complete solutions for new client recruitment and customer retention has bought the Swiss dmplus Group and has in this way significantly strengthened its presence in Austria and in Switzerland. In addition, by acquiring AKH GmbH (Abrechnungskasse der Heilberufe und Ärzteservice) BFS finance managed to enter the market for the billing of health services. And with the companies of the Verlag Automobil Wirtschaft GmbH (VAW Group) acquired in early 2004, a service provider for technical documentations with locations in six countries, arvato has, according to Ostrowski, "added an additional pillar in the automotive industry."
arvato print
In fiscal year 2004 the arvato printing companies had a consistently good capacity utilization on average. While the international business showed a stable development the results in the domestic market could be slightly improved. Ostrowski: "Printing is and will remain an arvato core business. We further strengthened this core business in 2004 by expanding our European network, by using nsynergies in distribution, by optimizing the structures and by investing in highly advanced production technologies." As the most important developments in 2004 he underlined the two new construction ventures in Italy and Great Britain. While in the Italian city of Treviglio the construction of the new € 110 million rotogravure printing shop made progress as scheduled the planning and preparation for the construction of another rotogravure facility in Liverpool were completed. "The Liverpool project," says Ostrowski, "is the largest single investment in the history of arvato with a total of € 170 million." In addition arvato has also invested heavily in its rotogravure printing company in Nürnberg. At the maul-belser media group the first rotogravure printing machine with a width of 4.32 meters was installed and commissioned in the year 2004. Ostrowski continues: "In addition we successfully completed the restructuring of the Spanish offset printing business in the last fiscal year and all the German black-and-white letterpress activities were integrated within GGP Media at the Pößneck location in Thuringia. Another highlight of the year, as the manager says, was the publication of the "Countdown Magazine", the first print product on the occasion of the FIFA WORLD CUP 2006TM produced by the arvato company.
In his comments Ostrowski also alluded to the merger talks with Gruner + Jahr and Axel Springer: "arvato, Gruner + Jahr and Axel Springer AG agreed in the last fiscal year to merge their German rotogravure operations as well as the Liverpool rotogravure project in a Joint Venture. In early September an appropriate Memorandum of Understanding (MoU) was signed and in November the proposed merger was submitted to the EU Commission in Brussels for examination under competitive law. By establishing the Joint Venture the companies concerned want to secure their printing activities in the highly competitive European illustration printing market."
arvato storage media
"In the storage media business", says Ostrowski "the last fiscal year showed quite clearly that our stand-alone strategy is a successful one." Sonopress has established itself as an internationally leading manufacturer of storage media and was able to increase the production volumes of CDs slightly and of DVDs significantly. Within the framework of investment programs the production capacities of all Sonopress production facilities were further expanded in the year 2004. An important contribution to the growth of the storage media business of arvato was also made by the topac subsidiary, a leading European provider of printing and packaging products for the sound, image and data carrier industries. Especially in the carton packaging and holography segments the company was able to make significant progress. The only drawback last year was the development of the raw materials prices. "The massive price increases, for example for polycarbonates in the second half of 2004, led to a deterioration of the margins and significantly depressed our earnings," explained the manager.
arvato IT
The IT business unit also developed positively last year according to Ostrowski: "arvato systems has again managed to broaden its external customer base in the core markets and empolis has finally established itself as an innovative service provider for company-wide content and knowledge management solutions." In addition, the group of companies has taken a major step forward in the build-up and expansion of mobile international services. Ostrowski verbatim: "arvato mobile, our full service provider in the area of mobile solutions, has given us a lot of joy in the year just ended. We were able to generate above average growth rates again especially in the B-to-B segment and also managed to extend our network to by now 13 countries." In this segment the manager sees sustainable growth opportunities in future years because of the enormous market potential both in the final customer and in the B-to-B segments.
About arvato:
With its roughly 250 subsidiaries worldwide arvato is among the largest internationally networked media service providers. In fiscal year 2004 the group of companies which is part of Bertelsmann AG generated sales of € 3.76 billion. The arvato subsidiaries all over the world currently employ in excess of 33,800 staff. Part of arvato AG are the companies of arvato print (including MOHN Media, the media group maul-belser as well as numerous printing companies in Europe and America), the business units arvato direct services (including customer retention systems and service center solutions), arvato logistics services (logistics and supply chain management), arvato storage media (including the production of CD-ROMs, DVDs and Audio-CDs) and arvato systems (international provider of qualified and tailor-made IT services) as well as empolis, a leading provider of company-wide content and knowledge management solutions and the mobile entertainment provider arvato mobile with brands like handy.de and TJ.net.
For further information about arvato AG please visit our website under www.arvato.de.
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