The total of more than 30 contracts being targeted for the new financial year 2018/2019 looks set to generate business worth some €150 million over the standard five-year term of these models. However, as the number of contracts concluded is just starting to pick up, this will only be reflected in the company’s figures to any significant extent from financial year 2019/2020 onward, when it will also help stabilize Group sales.
In addition, the series production of digital presses for packaging and label printing (Primefire and Labelfire), which also started in financial year 2017/2018, will have an increasingly positive impact on sales. The aim for the coming years is to deliver at least one digital press per month to customers. As the number of systems installed increases, stable, recurring sales of consumables will also continue growing and exceed machine-only business. Further positive impetus is anticipated from additional sales of consumables, increased levels of e-commerce business due primarily to the newly founded Heidelberg Digital Unit, and the ramp-up of Digital Platforms.
The recently agreed sale of the research and development building in Heidelberg marks the conclusion of the planned infrastructure projects at the Heidelberg and Wiesloch-Walldorf sites. Another important step as part of efforts to improve operational performance – among other things by reducing process and structural costs under the “Operational Excellence” initiative – has thus been completed.
Heidelberg can thus confirm the medium-term targets communicated in the summer of 2017. These include an increase in Group sales to approximately €3 billion, an operating result (EBITDA) of €250 million to €300 million, and a net result after taxes of more than €100 million.
“As announced at the last Annual Accounts Press Conference, Heidelberg is well on the way to achieving its goal of once again becoming the lighthouse of the industry. Our digital transformation will continue systematically in financial year 2018/2019. Both our new subscription model and the new digital presses remain in high demand. Given that this will have a substantial impact on our sales and result from 2019/2020 onward, we can confirm our medium-term targets,” said CEO Rainer Hundsdörfer.
Despite the negative currency effects in the period under review, incoming orders were at a very encouraging level for a post-drupa year at €2,588 million (previous year: €2,593 million). The demand in the final quarter of the year was substantially up on the figure for the same quarter of the previous year – €676 million compared with €604 million – among other things due to the full order volume of subscription contracts now being taken into account.
EBITDA excluding the effects of restructuring totaled €172 million in the reporting period (previous year: €179 million). This meant the resulting EBITDA margin of 7.1% (previous year: 7.1% was within the expected range.
Cash flow was clearly positive and on a par with the previous year’s level at €104 million. Due to acquisitions and investments associated with the construction of the new innovation center in Wiesloch, as expected, the free cash flow was slightly negative at €–8 million (previous year: €24 million). The net financial debt fell to €236 million in the reporting period (March 31, 2017: €252 million) and leverage at 1.4 remained well below the target value of 2.
“Our growth initiatives are accompanied by a new financing framework that also enables us to further accelerate the digital transformation through targeted acquisitions,” said CFO Dirk Kaliebe. “In the future, too, we will make a point of leveraging the resulting growth potential with acquisitions throughout the entire value-added chain,” he added.
Based on the progress in the targeted digital transformation, the company is forecasting moderate sales growth for 2018/2019. The solid order backlog at the beginning of the financial year supports this forecast.