German press manufacturer Heidelberger Druckmaschinen AG (Heidelberg), by starting its new 2017-2018 financial year (April 1 to June 30, 2017) with an increase in sales and earnings, is on course to achieve its annual targets. After initiating a range of measures, Heidelberg has already sharpened its strategic focus in the first quarter on the key areas of technology leadership, digital transformation and operational excellence. The company is underscoring its ambitions to consolidate a new corporate culture and return to growth with the motto Heidelberg Goes Digital. “We’re making good progress in transforming Heidelberg into a digital company,” said Rainer Hundsdörfer, CEO of Heidelberg. “We’ve already had our initial successes in the first quarter, thanks to our new digital presses and two constructive acquisitions. We want to become even faster and more efficient in the future and are continuing to reconfigure company structures to that end.” Here are some of the April 1 to June 30, 2017 highlights:
- Sales slightly higher than previous year at €495 million
- Operating result (EBITDA) up from €1 million to €14 million
- Net result after taxes improved by more than €20 million
- Several measures initiated to achieve medium-term targets
- Outlook: Sights still set on year-end targets for 2017-2018
Positive results from the implementation. During the first quarter of the current financial year, Heidelberg showcased itself as an industry pioneer for digitization at the key China Print tradeshow. Customers showed a great deal of interest in this forward-looking topic, which translated into positive developments in incoming orders in this important market, said the OEM. In addition, Heidelberg has encountered strong customer demand for its Primefire, the first industrial digital packaging printing press, and order bookings are full for the next two years. By taking over software supplier Docufy, the company is reinforcing its new digital platforms business area and expanding its Industry 4.0 portfolio. In the growth segment of consumables, coatings and pressroom chemicals have been further expanded in the EMEA region following the acquisition of this area from Fujifilm. Additional measures relating to operational excellence include efficiency improvements on all levels, such as higher efficiency in logistics achieved by the optimization of the tariff model in this sector, and by acquiring the logistics centre. The digitization strategy at Heidelberg has also been rewarded on the capital markets. For example, at the end of the period under review, a convertible bond was converted to equity almost in its entirety, which will see interest costs drop by approximately €5 million a year.
Medium-term targets in focus. Given the strong demand for the digital product portfolio in packaging and label printing, and the expansion and increased networking in a digital business model (Equipment, Consumables, Service), Heidelberg sees itself as being on course to achieve the company targets for 2022 that were announced in June (company sales of €3 billion/EBITDA of €250 – 300 million, and net result of €100 million). The additional revenues from new applications via digital platforms are being grown by the ongoing expansion of an eCommerce platform. Through the announced efficiency enhancements and improvements to the cost structure, operational excellence measures are set to drive up profitability by approximately €50 million, the company estimated.
Outlook: Sights still set on year-end targets for 2017-2018. In the financial year 2017-2018, Heidelberg is focusing on initiating and implementing its key strategic measures – the strengthening of technology leadership, digital transformation, and operational excellence – under the umbrella of Heidelberg Goes Digital. Although these activities will not have a noticeable impact on operations in the financial year 2017-2018, they will play an important role in helping to achieve the company’s medium-term targets. As announced at its Annual Press Conference on June 8, 2017, sales in financial year 2017-2018 are set to reach the same level as the previous year. This is due to the anticipated development in order levels, the acquisitions that have already been completed, and (a measure that will have an inverse effect on sales) the avoidance of low-margin or high-risk activities. In its financial year 2017-2018, the company aims to achieve an EBITDA margin in the region of 7% to 7.5% through efficiency improvement measures. Compared to the previous year and factoring in a further improvement in the financial result, net profit after taxes is set to show a moderate increase, the company concluded.