News

« Headlines

Tough targets from new Bertelsmann chief

13.12.07

Bertelsmann's future chairman and c.e.o. Hartmut Ostrowski has outlined aggressive plans for the media group, including a much higher organic growth rate of above 4% a year and the possible divestiture of underperforming subsidiaries. Speaking to more than 600 of the group's executives yesterday, Ostrowski said: "Growth is the basis of everything. Only through growth can we maintain, or attain, market leadership. Only through growth can we increase profits and company value for the long term."

He told Bertelsmann executives, including top staff from Random House, that those parts of the company which have failed to meet their targets "should not burden the company’s results indefinitely". Reports in the press this week had suggested that Bertelsmann is considering the sale of its book, DVD and music clubs outside Germany, which include the UK's Book Club Associates.

Ostrowski said it was the "responsibility of the entrepreneur to acknowledge that, in most cases, you're not going to turn a lamb into a lion. That means: We have to evaluate our business areas and-if necessary-take tough decisions. It goes without saying that we will keep an especially close eye on operations whose business is shrinking."

Speaking about future targets, he said he was aiming for a much higher organic growth rate of above 4% a year, and a return on invested capital of over 8%. Return on sales is also to be increased to 10%. By 2015, revenues are expected to increase from their current level of nearly €20bn to over €30bn, while operating EBIT is targeted to improve from €1.9bn to over €3bn.

Ostrowski said the group would step up its investment in growing lines of business such as the internet and education, and spoke of opportunities for organic growth within divisions, citing the launch of Random House Films. Growth in saturated markets is only possible "if we expand our business base and set new targets," he said.

He also called on his management team to make junior staff development a top priority and "actively to seek out and cultivate tomorrow's entrepreneurs".

“Only if we succeed in taking the lead, only if we succeed in growing and increasing the value of Bertelsmann-only then will we have done our job," he said.

Ostrowski takes up his new position on 1st January 2008.

Bertelsmann Hartmut Ostrowski

See Also