Heidelberg on Course after 1H 2015/2016

Heidelberger Druckmaschinen AG systematically implemented the Group’s strategic reorientation in the first half of financial year 2015/2016 (April 1-Sept. 30, 2015) and made further progress during this period. The growth areas – services and digital – have undergone considerable expansion, while structures and processes have been made even leaner in the sheetfed business.
 
The takeover of the Printing Systems Group (PSG) increased service and consumables sales as planned. The five subsidiaries have been fully integrated into the Heidelberg sales organization and the management structure adapted accordingly. Half of the planned additional sales of some €100 million from the takeover have been generated after six months.
 
Heidelberg is planning further acquisitions in this growth segment in the future and is expecting services and consumables to account for around 50% of Group sales in the medium term.
 
The greater focus of the R&D budget on digital printing is also becoming increasingly apparent. One example is the successful sales launch of the company’s new digital label press for the packaging market. Unveiling the first industrial sheetfed digital press at the drupa trade show next year will mark the next milestone in the digital strategy.
 
As for its sheetfed business, the company continued the planned efficiency measures with the aim of increasing flexibility and boosting future profitability. Full implementation by the end of the financial year will further improve the profitability of the sheetfed business.
 
“We are systematically implementing our growth strategy. New business models and a dynamic portfolio have led to a significant increase in sales,” said Dirk Kaliebe, CFO and deputy CEO of the company.
 
After the first six months of financial year 2015/2016, business results at Heidelberg are in line with the company’s own planning. The further increase in the order backlog at the end of the second quarter and positive effects resulting from the portfolio measures lay the foundation for further improving sales and, above all, the profitability of Heidelberg Equipment in the second half-year period.
 
Group sales after six months increased to €1.162 billion (previous year: €996 million). This includes €68 million from positive exchange rate effects. Sales were up in all regions except Eastern Europe, where they remained stable. Incoming orders in the period under review improved to €1.323 billion (previous year: €1.167 billion).
 
“After the first half of the current financial year, we are on course to achieve our targets for the year. As in previous years, we are expecting a further increase in sales and in the result in the second half of the financial year,” added Kaliebe.
 
The operating result in the period under review was up on the previous year. EBITDA excluding special items totaled €79 million (previous year: €53 million) and EBIT excluding special items €43 million (previous year: €19 million). Both these figures benefited from income from the takeover of PSG amounting to some €19 million in the current financial year, compared with income of €18 million from the Gallus transaction in the previous year.
 
In the Heidelberg Services segment, improvements achieved through the portfolio measures led to a better result, which at the end of the half-year was already well on track to achieve the target EBITDA margin of 9 to 11%.
 
Following the completed refinancing of the credit facility, the financial result for the half-year improved to €–30 million (previous year: €–33 million). The net result before taxes also improved, from €–32 million in the previous year to €–8 million.
 
At €–30 million, the free cash flow in the period under review remained at the same level as in the previous year (€–30 million). Excluding the price paid to acquire PSG, and non-recurring payments associated with the early redemption of a bond and the reorientation, it would have been positive.
 
The net financial debt at Sept. 30 increased slightly to €284 million (March 31, 2015: €256 million) and thus remains at a low level.
 
Based on solid order books, Heidelberg is aiming for sales growth of 2% to 4% after adjustment for exchange rate effects in the current financial year 2015/2016. The company continues to anticipate an operating margin on EBITDA of at least 8% of sales, adjusted for exchange rate effects, in financial year 2015/2016. The Heidelberg Equipment segment is expected to contribute within a range of 4% to 6% to this result and the Heidelberg Services segment 9% to 11%.