Bertelsmann sees tough 2009, sales, EBIT to decline

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Tue Mar 24, 2009 6:26am EDT

* Bertelsmann says sees drop in 2009 sales, operating profit

* Says financed until 2012

* Says sees risk of writedowns

* Says management will forego bonus this year

(Adds details, background)

BERLIN, March 24 (Reuters) - Bertelsmann [BERT.UL], Europe's largest media group, said it expected sales and operating profit to decline 2009 as it braced itself for a severe downturn in advertising markets and potential writedowns.

"The global economic crisis with its implication for consumer behavior and ad bookings will be a severe test for some areas of Bertelsmann, too," Chief Executive Hartmut Ostrowski said on Tuesday.

Bertelsmann, which owns publishers Random House and Gruner+Jahr as well as European broadcaster RTL Group AUDK.LU, generates around 30 percent of revenue from advertising.

Bertelsmann's Chief Financial Officer Thomas Rabe said on Tuesday he could not yet say to what degree revenue and operating profit would shrink this year because it was difficult to predict how the economic climate would develop.

Asked if he saw the possibility of Bertelsmann posting a loss in 2009, Rabe said it was unlikely but that he did see the risk of writedowns.

Operating profit excluding special items in 2008 was 892 million euros ($1.22 billion) compared with 1.3 billion euros in 2007, Bertelsmann said.

Sales in 2008 were 16.1 billion euros, down 0.5 percent.

Net income last year dropped to 270 million compared with 405 million a year earlier due to restructuring and writedowns at its British TV business and its Direct Group book club unit.

Income attributable to Bertelsmann shareholders was 142 million euros.

Bertelsmann, controlled by the Mohn family for the past 100 years, took on additional debt to buy out Belgian investor GBL LAMBt.BR and prevent its own public listing in 2006.

Net debt stood at 3.4 billion euros by end of 2008.

Rabe said due to current economic conditions Bertelsmann would not reduce its debt further in 2009 and would remain above its internal target of a ratio of financial debt to operating EBITDA of 3.0. Leverage factor was currently at 3.2, Rabe said.

The company was however well financed until 2012 and was in no danger of breaching banking covenants, Rabe said.

Ostrowski said management would do its part in cutting costs by foregoing around 50 percent of its annual pay this year.

(Reporting by Nicola Leske)

((nicola.leske@thomsonreuters.com; +49 69 7565 1214; Reuters Messaging: nicola.leske.reuters.com@reuters.net))

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