Richard Timson, managing director, Heidelberg ANZ told Australian Printer, “The result is a good one for Heidelberg as it demonstrates it is on track to achieve its goals in line with its major shareholders expectations. Heidelberg Australia is well placed and is performing above budget across all business units. We are seeing strong sales and inquiries which is pleasing and indicates our customers are feeling more buoyant which is a big positive.”
Gerold Linzbach, CEO of Heidelberg, says, “In the financial year just closed, we introduced the necessary steps to return to profitability in financial year 2013/2014. Heidelberg now has a more flexible setup with clearly assigned responsibilities. We are focusing our full attention on our profitability by adapting to the market situation. We will make strategic adjustments to the portfolio and increasingly focus on business areas that offer the potential to achieve long-term profitability.”
The latest results included special items amounting to €65m (€142m last year) due to costs related to the Focus 2012 programme.
Free cash flow excluding payments for Focus 2012 was positive at around €44m while the net debt remained stable at €261m. Heidelberg says it will address the operating segments and has started on revising and adapting the Group’s business areas in the year under review.
Heidelberg says sales of new equipment did not quite meet expectations, because drupa did not result in a lasting revitalisation of the market as had been hoped. Growth was also less dynamic in certain countries such as Brazil. However, the company adds that the services and consumables areas progressed according to plan while sales in China exceeded the previous year’s value and accounted for around 16 per cent of total sales, making it the company’s largest single market.
Despite a number of negative effects, the company says that growth in volume combined with the savings made by the Focus 2012 efficiency programme led to a €21m improvement in EBITDA to €111m (previous year: €90m). The result of operating activities (EBIT) excluding special items climbed to €28m (previous year €3m).
The costs of Focus 2012 accounted for a large part of special items totaling -€65m in the financial year just closed (previous year: -€142m).
To further improve the ability of Heidelberg to respond to short-term fluctuations in sales, and to further lower its cost base and make this more flexible, the management board decided in the fourth quarter to step up a number of measures in the Focus 2012 programme. It will gear The majority of these measures toward cutting staff costs by reducing the headcount to significantly below 14,000. The additional measures will increase the annual savings achieved by Focus 2012 to more than €200m from the end of the current financial year.
Dirk Kaliebe, chief financial officer for Heidelberg, says, “Systematic implementation of the Focus 2012 efficiency programme played a key role in achieving our forecast result in the financial year just closed. Thanks to our comprehensive asset management, we have succeeded in keeping our debt at a low level overall. What’s more, Heidelberg benefits from a sound financial footing.”
Incoming orders in the reporting period increased to €2.82bn (previous year €2.55bn), while the order backlog as at March 31, 2013 matched the previous year’s level at €502m. Heidelberg offers two reasons for the reduction in equity to around €400m. Firstly, one-time payments for Focus 2012 and the negative financial result led to a net loss for the year. Secondly, there was a change to the interest parameters relating to pensions. The equity ratio, which relates to the balance-sheet total, fell by 17 per cent. In the medium term, the company is looking to significantly increase this ratio again by returning to long-term profitability.
Heidelberg sees the general conditions for the printing industry as stable in the current financial year, according to Heidelberg, the market in which the company operates is robust, and the global print production volume will remain constant or increase slightly. Heidelberg therefore anticipates that global demand for printing presses and consumables will develop accordingly. In light of this, the company is assuming that sales will match the level of the year under review in the 2013/2014 financial year. As in the previous year, Heidelberg forecasts that the share of sales will again be significantly higher in the second half of the year.
The company still expects a clearly negative result, though this should be above the figure for the previous year. Results will improve further in the subsequent quarters. The intended savings under the Focus 2012 programme of €180m will develop their full effect for the first time over the course of the 2013/2014 financial year. Heidelberg is assuming stable to slightly rising sales in the years after the 2014/2015 financial year. In addition to initiatives to raise margins and optimise the portfolio, the company will also continue to reduce the cost base in future in order to achieve a medium term margin target of above 8 per cent EBITDA on sales.
The Heidelberg Annual General Meeting will take place on July 23, 2013 and the figures for the first quarter of financial year 2013/2014 are due to be published on August 13, 2013.
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