Heidelberger Druckmaschinen AG: Heidelberg achieves targets for 2018/19 - growing economic risks slow down growth

Heidelberger Druckmaschinen AG / Key word(s): Preliminary Results/Forecast
Heidelberger Druckmaschinen AG: Heidelberg achieves targets for 2018/19 - growing economic risks slow down growth

07-May-2019 / 18:25 CET/CEST
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Heidelberg achieves targets for 2018/19 - growing economic risks slow down growth
 

·        Provisional group sales of EUR2,490 million for 2018/19 approximately 3 percent up on previous year

·        EBITDA margin of 7.2 percent within target range and slightly up on previous year

·        Cautious outlook for 2019/20 - sales and profitability forecast at previous year's level

·        Deterioration in underlying conditions delay medium-term growth targets

·        New digital business models, industrial digital print and sustainable cost efficiency to be vigorously pursued 


Following a strong end to financial year 2018/19 (April 1, 2018 to March 31, 2019), Heidelberger Druckmaschinen AG (Heidelberg) achieved its operating targets. After submitting preliminary figures that have yet to be audited, group sales were reported at EUR2,490 million, or approximately 3 percent higher than the previous year (EUR2,420 million). Furthermore, the company's operating profit margin based on EBITDA excluding restructuring result was within the target range, at 7.2 percent (previous year 7.1 percent). According to these preliminary figures, absolute EBITDA was EUR180 million (2017/18: EUR172 million). Generating post-tax profits of EUR21 million, Heidelberg achieved an increase on the previous year (EUR14 million), as had been anticipated. Free cash flow in the fourth quarter was positive and, as expected, at EUR-93 million for the year as a whole, was lower than the previous year's figure of EUR-8 million. In the past financial year, investments were made in particular in digital projects, the development of new business models and the new Innovation Center at the Wiesloch-Walldorf site. Following a capital increase, the net financial debt was EUR250 million (March 31, 2018: EUR236 million) and, at 1.4, leverage remained well below the target value of 2.
 
'As planned, we have ended financial year 2018/19 with moderately improved sales and results. Our core business exhibited positive development and the company's digital transformation is making good progress,' commented Heidelberg CEO Rainer Hundsdörfer.
 
Looking forward, despite growing weakness in the global economy towards the end of the financial year, Heidelberg expects to see a stable development in its core business and growth in the digital subscription model. However, with underlying economic conditions making companies more reluctant to invest in new technologies, expectations regarding a ramp-up in digital printing will need to be more conservative than originally planned. Postpress sales will grow less due to the antitrust authorities' decision to block the takeover of MBO. Furthermore, the decline in the retail business with consumables is likely to be larger than anticipated.
 
'This development makes us all the more determined to pursue the Group's reorganization vigorously. The expansion of the digital business models and the associated higher proportion of recurring contract sales will make us less susceptible to economic fluctuations in the future,' Hundsdörfer explains.
 
Cautious outlook for 2019/20 - sales and profitability forecast at previous year's level
Over recent months, the global economic slowdown has resulted in a subdued dynamic in new press orders. For example, at EUR2,559 million, incoming orders at the end of March 2019 were slightly below the value for the previous year (EUR2,588 million). Due to the growing uncertainty on global markets caused by trade disputes between the US and China in particular and by the Brexit, the VDMA industry association has struck a considerably more pessimistic tone in its latest annual forecast. On this basis, Heidelberg is adopting a cautious approach as the new financial year 2019/20 gets underway. While the company anticipates a stable development in group sales and profitability compared to 2018/19, economic conditions are delaying medium-term growth prospects. Heidelberg expects sales to rise at a slower pace than previously planned, with a significantly higher proportion of the cyclically resistant contract business than at present.
 
 
Implementation of digital business models and sustainable cost efficiency to be vigorously pursued
The positive response from customers has shown that Heidelberg was right in its recent decision to embark on a strategy of digital transformation. There is growing demand for the new subscription model in particular, under which Heidelberg products and services are offered as part of a usage-based all-in contract that runs over several years. The company succeeded in achieving its target of concluding approximately 30 contracts in financial year 2018/19. To counteract customers' restrained investment activity in view of the more difficult underlying economic conditions, the company is continuing to focus on boosting the efficiency of structures and consistently carrying forward asset and net working capital management so as to finance further investment in digital business models, products, and services. The funds that are freed up by this approach will enable the company to pursue its transformation vigorously and keep net financial debt at a low level.
 
'There is no alternative to the 'Heidelberg goes digital' strategy, and we will increasingly reap the rewards of our strategic activities. Unfortunately, current economic developments are dampening our growth dynamic, even though the market potential for digitization in the printing industry and for digital packaging printing is as big as it has ever been,' says Hundsdörfer.
 
 
Next important date:
Heidelberg will be presenting the audited financial statements for financial year 2018/2019 and further details on strategy and the outlook at the Press Conference on June 6, 2019 in Frankfurt.
 
For additional details about the company and image material, please visit the Press Lounge of Heidelberger Druckmaschinen AG at www.heidelberg.com.

Corporate Communications
Thomas Fichtl
Phone: +49 6222 82-67123
Fax: +49 6222 82-67129
E-mail: Thomas.Fichtl@heidelberg.com
 
Investor Relations
Robin Karpp
Phone: +49 6222 82-67120
Fax: +49 6222 82-99 67120
E-mail: robin.karpp@heidelberg.com

Important note:
 
This press release contains forward-looking statements based on assumptions and estimations by the Management Board of Heidelberger Druckmaschinen Aktiengesellschaft. Even though the Management Board is of the opinion that those assumptions and estimations are realistic, the actual future development and results may deviate substantially from these forward-looking statements due to various factors, such as changes in the macroeconomic situation, in the exchange rates, in the interest rates, and in the print media industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no warranty and does not assume liability for any damages in case the future development and the projected results do not correspond with the forward-looking statements contained in this press release.
 

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