Heidelberg is bleeding half a million dollars a day with restructuring costs and falling sales in China pushing the press giant to a $138.4m loss in nine months.
However, it still expects to achieve its target of an EBITDA margin of at least eight per cent for the 2015/16 financial year.
The company predicts sales will be down five per cent for this year, after falling 7.8 per cent to $2.26bn compared to the first nine months of the previous year. It says it will have strong sales in the final quarter of this year.
Heidelberg blames the fall in sales on a slowdown of new machinery sales in China, its biggest market ‘which can be attributed to economic developments in the country’, and that other markets are performing as expected. Its restructuring costs amounted to around $110m.
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Heidelberg Australia managing director Richard Timson says the local operation is having a good year and expects to get within five per cent or better of its sales target by year’s end.
He says while sales will be down on last year it is in line with expectations in a consolidating print market, and while consumables and servicing are ‘under pressure’, it has sold more presses than last year.
“We are hanging in there and have sold more equipment than expected, especially a lot more A2 presses compared to A1, which means more revenue,” he says.
“People are tightening their belts and buying less consumables and servicing their machines less often, and services is always under pressure.
“We are also still seeing flow on effects from Geon, which had big servicing and consumables needs, and others that have fallen over recently.
Timson says it is hard to tell where sales will end up as several orders are still being shipped and processed.
He says the split with Kodak also affected short-term prepress sales but have recovered since the new Fujifilm partnership and will continue to be strong.
Incoming orders for the global company rose by $30.6m in Q3, but were down overall for the nine months, from $2.7bn to $2.6bn.
The $138.4m loss is more than double the $58.3m loss of the first nine months of last year.
Heidelberg did manage to pay down some debt, taking it from $397m to $365m.
Staff numbers were cut by 600 from 12,851 plus 621 trainees to 12,280 plus 534 trainees.
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Heidelberg chief executive Gerold Linzbach says the company plans to continue reducing low-margin business, such as its withdrawal from most of the finishing market and ceasing production of the GTO.
Linzbach says this and ‘boosting the profitability of core sheetfed offset operations’, which make up 56 per cent of its revenue, will help it reach the eight per cent EBIDTA margin target.
“We have geared our portfolio toward profitability and growth and adjusted resources accordingly,” he says.
“I am confident that our strategic restructuring will enable us to achieve and maintain our target margin from next financial year onward and return to growth in the future.”
Compared over nine months, and despite lower sales, EBITDA excluding special items increased to $116.7m from $97.7 million, in part due to buying out the rest of Gallus.
EBIT excluding special items rose from $14.6 million to $42.3 million.
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