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UPDATE 1-Weak advertising hits Bertelsmann in Q1

Tue May 12, 2009 3:47am EDT

* Says sales down 8 pct, EBIT down 54 pct

* Posts net loss

* Confirms 2009 sales, EBIT to decline vs 2008 level

* Plans to concentrate on cost savings

(adds detail, background)

FRANKFURT, May 12 (Reuters) - Bertelsmann [BERT.UL], Europe's largest media group, stuck to its 2009 outlook after falling advertising revenues pushed it to a first-quarter net loss and shaved almost 8 percent off sales.

The owner or broadcaster RTL AUDK.LU and publisher Random House reiterated it expected 2009 sales and operating profit to fall from last year's level but did not give more details.

"The degree of year on year change will depend on the intensity and duration of the economic downturn," it said.

Bertelsmann said it now planned to focus on cost cuts to minimise the impact of the economic crisis on the the group.

Bertelsmann said earnings before interest and tax (EBIT) in the first three months fell by more than 50 percent to 115 million euros ($156.5 million) on sales of 3.5 billion.

The Guetersloh-based company posted a net loss of 78 million euros compared with a net profit of 35 million a year earlier.

The company generates around 30 percent of revenue from advertising.

Last week, its pan-European broadcaster RTL downgraded its expectations, saying it now expected profit to be considerably lower than in 2008 as advertising budgets continue to be trimmed amid recession and rising unemployment across Europe.

Bertelsmann gave one glimmer of hope, saying that it will see a positive impact in its service business, Arvato, as companies increasingly look to outsource services to cut costs.

Arvato has become the group's fastest-growing business, branching out from media-related services into call centres, financial clearing houses and mobile services.

Bertelsmann has been controlled by the Mohn family for the past 100 years and has opted to remain private, going so far as to take on additional debt to buy out Belgian investor GBL LAMBt.BR and prevent its own public listing in 2006.

Bertelsmann said debt stood at 6.72 billion euros by the end of March, compared to 6.63 billion at the end of 2008.

(Reporting by Nicola Leske, editing by Knut Engelmann)



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