“We’ve made Heidelberg fit for the future,” said Gerold Linzbach, CEO of the company. “The reorientation will enable Heidelberg to enjoy sustained profitable growth in the future.”
Future growth will be generated primarily in the services and digital sectors. Heidelberg continued to strengthen the services sector in the past financial year through acquisitions (BluePrint Products, Printing Systems Group, Fujifilm Sverige). The newly acquired companies are set to generate sales of more than €100 million from the current financial year 2015/2016 onward and will help ensure sustainably profitable growth for Heidelberg following complete integration. The Heidelberg Group’s position in the growth segment of digital printing was further strengthened with the complete takeover of Neo7even and the Gallus Group and the launch of a digital label printing machine.
Another aim is to further improve the company’s profitability. The reorientation of unprofitable activities such as those in postpress, which was completed in financial year 2014/2015, will improve the result by approximately €30 million in the future. The structures for offset printing have also been adapted to the market environment, thus enabling Heidelberg to respond more flexibly to market fluctuations and achieve cost savings in the low double-digit million euro range.
“From the current financial year onward, we expect to consistently achieve clearly positive net results,” added Linzbach.
2014/2015: Operating margin (EBITDA margin excluding specialeffects) slightly higher despite portfolio optimization
Sales in the 2014-15 financial year were €2.33 billion (previous year: €2.43 billion), in line with expectations as adjusted at the half-year point. This decline of around 4% was due to portfolio optimization, the associated sales of parts of the company and the effects of the general slowdown in growth in China.
Despite the lower volume of sales, Heidelberg reached its target of achieving higher operating profitability than in the previous year. The operating margin was slightly up on the previous year on a comparable basis due to cost savings. Net special effects of around €50 million, largely from reorganizing the company pension scheme in Germany, led to an improvement in EBITDA excluding special items to €188 million in the year under review (previous year: €143 million).
Due to non-recurring expenses of around €25 million resulting from financing activities, the financial result was €-96 million. Pressure on the financial result will ease significantly in the future due to lower interest payments for the new financing instruments. The net result after taxes was negative at €-72 million (previous year: €4 million).
Free cash flow was €-17 million in the year under review (previous year: €22 million). This included one-time payments for the Focus efficiency program of around €45 million.
“Heidelberg has a stable financial footing. With three pillars, the financing structure is now well balanced and basic funding is assured until 2022,” said Dirk Kaliebe, CFO at Heidelberg. “This long-term financing framework provides a solid foundation for a further strategic realignment of the company.”
For the current 2015-16 financial year and in the medium term, Heidelberg is striving for annual sales growth of 2% to 4%. Assuming that the initiatives to increase margins and optimize the portfolio take effect in the current financial year, the company is anticipating an operating margin on EBITDA of at least 8% of sales in the 2015-16 financial year.