Heidelberg Reports Group Sales Up 6% to €1,114 Million in 1H 2018/19

Six months into financial year 2018/2019, the launch of the new subscription model has led to further growth in incoming orders and the order backlog at Heidelberger Druckmaschinen AG. No fewer than 20 subscription contracts covering the entire press lifecycle – including service, software and consumables – have been signed to date and demand for new machines remains healthy.
 
As a result, incoming orders for the half-year have climbed by around 6%, from €1,234 million to €1,306 million. This figure would have been higher still had it not been for negative exchange rate movements amounting to €17 million. The order backlog improved by 23%, from €627 million to €774 million. Sales of up to €100 million, in particular for services and consumables, are expected over the standard five-year term of the subscription contracts already signed, which represent an annual sheet volume in the order of 1 billion pages.
 
“The subscription model offers huge potential. It’s transforming the market and also our company. We’re continuing to drive the digital transformation at Heidelberg,” said Heidelberg CEO Rainer Hundsdörfer.
 
The implementation of the corporate strategy towards digitization is progressing. Printers in Europe, the US and China are already producing with high quality and productivity for their customers with the new Primefire digital printing system.
 
Heidelberg increased its net sales by 6% to €1,114 million (H1 2017/2018: €1,054 million) in the reporting period. EBITDA excluding restructuring result for the half-year climbed from €60 million to €62 million, which meant the EBITDA margin remained the same at 5.6%. The financial result after six months worsened from €–24 million to €–28 million but will benefit significantly from lower interest payments in the future.
 
This meant the operating cash flow of €27 million did not quite match the previous year’s level of €35 million. An increase in inventories due to the growing order backlog and the start-up of digital operations as well as investments in the construction of the innovation center at the Wiesloch-Walldorf site were among the factors influencing the free cash flow in the reporting period (€–86 million compared with €–32 million in the previous year). Despite seasonal factors resulting in a higher net financial debt of €320 million (previous year: €259 million), the leverage of 1.8 as at Sept. 30, 2018, was once again well below the target level of 2.
 
“As demonstrated in October with the acquisition of MBO, we’re investing in the company’s digital transformation. This highlights our strategic focus on consistently aligning our portfolio and new business models with the growth segments of digital and packaging,” said Heidelberg CFO Dirk Kaliebe.