Twenty contracts already signed for Heidelberg’s new Subscription Model

Six months into its financial year 2018/2019, the launch of Heidelberg’s new subscription model has led to further growth in incoming orders and an order backlog at the OEM. Twenty subscription contracts covering the entire press life cycle – including service, software and consumables – have been signed to date and demand for new machines remains healthy. As a result, incoming orders for the half-year have climbed by about 6% – from €1,234 million to €1,306 million. This figure would have been higher still had it not been for negative exchange rate movements amounting to €17 million, Heidelberg added. Through its subscription model, Heidelberg provides everything a printer needs – including new Heidelberg equipment, Prinect software, Saphira consumables, parts, consulting, and service – all for a monthly fee that’s based on the number of printed sheets produced each month. The cost-per-sheet charge is calculated by working with individual printers to analyze their current operations and to predict what production levels can be expected once all Heidelberg components are in place. This also helps establish a goal for printers to increase their overall production and decrease their total cost-per-sheet.

Rainer Hundsdörfer.

Heidelberg’s order backlog improved by an impressive 23%, from €627 million to €774 million. Sales of up to €100 million, in particular for services and consumables, are expected over the standard five-year term of the subscription contracts already signed. This represents an annual sheet volume of about one billion pages. “The subscription model offers huge potential. It’s transforming the market and also our company. We’re continuing to drive the digital transformation at Heidelberg,” said Heidelberg CEO Rainer Hundsdörfer. It’s expected that 30 contracts for the new subscription model will be concluded during the financial year 2018/2019 – which will mean a further increase in the order backlog. Given the continued high level of interest from international customers, the number of contracts is set to climb to around 100 in the coming financial year, said Heidelberg. However, the new business model will only make a relatively small contribution towards overall sales – but “this will grow substantially in the medium term.”

Dirk Kaliebe.

Also, the implementation of the OEM’s corporate strategy towards digitization is progressing. Printers in Europe, the U.S. and China are already producing with high quality and productivity for their customers with Heidelberg’s new Primefire digital printing system. With the newly founded Heidelberg Digital Unit, its e-commerce business will also be rapidly expanded. As part of a digital roadmap, IT will also focus even more on efficient processes and the challenges of digital business models. “As demonstrated in October with the acquisition of MBO, we’re investing in the company’s digital transformation. This highlights our strategic focus on consistently aligning our portfolio and new business models with the growth segments of digital and packaging,” said Heidelberg CFO Dirk Kaliebe.

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Tony Curcio is the editor of Graphic Arts Magazine.