Heidelberg Starts New Financial Year 2017/18 with Increase in Sales, Earnings

Heidelberger Druckmaschinen AG (Heidelberg) has started the new 2017/18 financial year (April 1 to June 30, 2017) with an increase in sales and earnings. That means it is on course to achieve its annual targets.
 
After initiating a raft of measures, Heidelberg has already sharpened its strategic focus in the first quarter on the key areas of technology leadership, digital transformation and operational excellence. The company is underscoring its ambitions to consolidate a new corporate culture and return to growth with the motto “Heidelberg goes digital.”
 
“We are making good progress in transforming Heidelberg into a digital company,” said Rainer Hundsdörfer, CEO of Heidelberg. “We have already had our initial successes in the first quarter, thanks to our new digital presses and two constructive acquisitions. We want to become even faster and more efficient in the future and are continuing to reconfigure company structures to that end.”
 
Heidelberg has encountered strong customer demand for the Primefire, the first industrial digital packaging printing press, and order books are full for the next two years. By taking over software supplier DOCUFY, the company is reinforcing the new digital platforms business area and expanding its Industry 4.0 portfolio. In the growth segment of consumables, business with coatings and pressroom chemicals has been further expanded in the EMEA region following the acquisition of this area from Fujifilm.
 
Given the strong demand for the digital product portfolio in packaging and label printing and the expansion and increased networking in a digital business model (Equipment, Consumables, Service), Heidelberg sees itself as being on course to achieve the company targets for 2022 that were announced in June (company sales ~€3 billion / EBITDA of €250 million – 300 million / net result > €100 million). The additional revenues from new applications via digital platforms are being grown by the ongoing expansion of an eCommerce platform. Through the announced efficiency enhancements and improvements to the cost structure, operational excellence measures are set to drive up profitability by approximately €50 million.
 
As indicated, net sales and the net result in the first quarter of the year under review have improved over the same quarter of the previous year. For example, sales rose compared to the previous year, reaching €495 million (same quarter of previous year: €486 million). As anticipated, at €629 million, incoming orders were below those of the same quarter of the previous year (€804 million), which saw a particularly high level of incoming orders from drupa. The order backlog increased by more than 20% from €497 million at the end of the financial year to €603 million as at June 30, 2017.
 
Profitability, as expressed in EBITDA and EBIT, increased in the quarter under review compared to the previous year’s values. At €14 million, EBITDA was far better than in the same quarter of the previous year (€1 million), while EBIT amounted to €–3 million (previous year: €–16 million).
 
As a result of company and real estate acquisitions and payments for portfolio optimization, free cash flow in the first three months was negative, at €–13 million (previous year: €6 million). Compared to the financial year-end, shareholder’s equity increased to €382 million on the balance sheet date (previous year: €167 million). Financial liabilities dropped significantly, largely due to the almost complete conversion of the convertible bond, and net financial debt shrank to €234 million (previous year: €263 million).
 
“The almost complete conversion of a bond into shareholder’s equity is further evidence that our digitization strategy is being acknowledged on the capital markets. The repayment of the convertible bond has brought us closer to our goal of achieving a sustainable improvement in net interest income. We want to reduce interest costs, which currently stand at €34 million, to €20 million annually in the future,” says Dirk Kaliebe, CFO at Heidelberg.
 
As announced at the Annual Press Conference on June 8, 2017, sales in financial year 2017/18 are set to reach the same level as the previous year. In financial year 2017/18, the company aims to achieve an EBITDA margin in the region of 7% to 7.5% through efficiency improvement measures.