Heidelberger Druckmaschinen AG (Heidelberg) (FWB: HDD) is
publishing its results for the first quarter of financial year
2010/11 (April 1 to June 30, 2010). The overall improvement in the
underlying economic conditions has had a positive impact on
business. Heidelberg customers showed greater readiness to invest
in the period under review, thus continuing the previous quarters'
upward trend in incoming orders.
At EUR 786 million, incoming orders in the first quarter
of financial year 2010/11 were 43 percent up on the previous year's
figure (EUR 550 million) and 16 percent higher than the previous
quarter (EUR 678 million). Contributory factors included positive
exchange rate movements equivalent to around EUR 45 million, the
high level of orders placed at the IPEX trade show in May 2010, and
encouraging business developments – especially in China and
Brazil.
As a result of the healthy incoming order situation, the
Heidelberg Group's order backlog improved significantly to
EUR 810 million at the end of the first quarter. This is the
highest level for six quarters.
In the first three months of the current financial year,
Heidelberg recorded sales of EUR 563 million, around EUR 36
million of which are linked to exchange rate movements. After
adjusting for these movements, sales were 3 percent up on the
previous year’s figure of EUR 514 million.
“The market recovery continued in the first quarter, thus
helping to maintain the upward trend in incoming orders and sales,”
said Heidelberg CEO Bernhard Schreier. “Together with the
cost-cutting measures initiated, this has substantially reduced our
operating loss,” he added.
The operating result excluding special items improved
considerably from the previous year's figure of EUR -63 million to
EUR -35 million. Key factors in this improvement were slightly
higher sales, the savings achieved by the cost-cutting program, and
the greater efficiency resulting from the reorganization. Following
the agreement reached between the company and employee
representatives, parts of the provisions formed in the previous
year to improve efficiency could be released. As a result, the
income from special items was EUR 15 million. This produced
an operating result, including special items, of EUR -20 million.
Higher financing costs led to a financial result of
EUR -35 million (previous year: EUR -22 million). The
profit before taxes for the first quarter improved to EUR
-56 million (previous year: EUR -86 million), while net loss
in the period under review was EUR -52 million (previous year: EUR
-69 million).
Heidelberg recorded a positive free cash flow of EUR 62
million in the first quarter, a significant improvement on the
figure of EUR -29 million for the same quarter the previous year.
Key factors in this positive development are the further
improvement in net working capital and tight asset management.
“The further improvement in our operating result and the
increase in our free cash flow prove that we are on the right track
to ensure a stable and profitable future for Heidelberg,” said the
company's CFO Dirk Kaliebe. ”Due to the capital increase approved
by the Annual General Meeting at the end of July, Heidelberg can
expand its scope with regard to other refinancing measures, and can
thus boost its flexibility. Shareholders, customers, and employees
will all benefit equally from this,” he added.
Headcount fell by a further 278 in the first quarter of
financial year 2010/11. As at June 30, 2010, the Heidelberg Group
thus had a workforce of 16,218 worldwide.
Business results in the divisions
Since April 1, 2010, the Heidelberg Group has been split into
the Heidelberg Equipment, Heidelberg Services, and Heidelberg
Financial Services divisions. This new corporate structure will
enable more targeted marketing and efficient delivery of customer
services. There is to be greater focus on services and consumables
alongside the traditionally strong new equipment business.
In the period under review, the Heidelberg Equipment
division benefited in particular from the company's success at the
IPEX industry trade show. After adjustment for exchange rate
movements, incoming orders for the quarter increased by 57 percent
on the same quarter of the previous year to EUR 501 million
(previous year: EUR 301 million). Sales were 7 percent up on the
previous year (1 percent after adjustment for exchange rate
movements) at EUR 297 million. The operating result excluding
special items for the first quarter was still negative at EUR -48
million (previous year: EUR -53 million), but the savings resulting
from the program of cost-cutting measures and the reorganization
had a positive impact.
The Heidelberg Services division is less closely tied to
economic cycles than the Heidelberg Equipment division and has
therefore been less affected when orders have fallen off. Even so,
this division recorded higher incoming orders and sales than in the
same quarter the previous year. Incoming orders were 15 percent up
(8 percent after adjustment for exchange rate movements) at EUR 280
million, while sales were 13 percent higher (5 percent after
adjustment for exchange rate movements) at EUR 261 million. At EUR
10 million, the operating result excluding special items was much
better than the previous year's figure of EUR -11 million. This was
the result of a more favorable sales mix, the increase in sales,
and a lower cost base.
The Heidelberg Financial Services division is
still responsible for all the company's sales financing activities.
In the quarter under review, the division once again recorded a
positive operating result of EUR 3 million, an improvement on the
figure for the same quarter the previous year (EUR 1 million).
Further increases in Asia and Latin America
In the first quarter, incoming orders increased in all
regions. The regional markets referred to in external
reporting have been adapted to the company's internal sales
structure. The Baltic markets and Finland have been moved from
Europe, Middle East and Africa to Eastern Europe, and Mexico has
been transferred from Latin America to North America. The figures
for the previous year have been adapted accordingly.
At EUR 316 million, incoming orders in the Europe, Middle
East and Africa region were 39 percent up on the previous
year’s figure of EUR 227 million. They actually doubled in the U.K.
thanks to the company's successful showing at IPEX. German
customers also rediscovered their willingness to invest. At EUR 84
million, incoming orders in the Eastern Europe region were
up 59 percent on the previous year’s figure of EUR 53 million. In
the Latin America region, they more than doubled to EUR 44
million (previous year: EUR 19 million). This is a result of the
positive development on the Brazilian market, which received a
further boost from the orders placed at ExpoPrint Latin America
2010 in Sao Paulo. After adjustment for exchange rate movements,
incoming orders in the North America region were merely up 7
percent at EUR 80 million (previous year: EUR 66 million).
Especially high was the increase in the Asia/Pacific region.
Incoming orders here totaled EUR 262 million, the highest level for
five years and 42 percent up on the previous year's figure of EUR
185 million. The continued positive development in China played a
key role in this, but significant increases were also recorded on
many smaller markets such as India.
“The Chinese economy is still booming, with double-digit growth
rates in some areas. China and Brazil are very attractive growth
markets for us and we intend to further increase our share of sales
there in the coming years,” said Bernhard Schreier.
Outlook
For the current financial year 2010/11, Heidelberg is projecting
a modest growth in sales. The result of operating activities will
benefit from the increasing profit contributions as well as from
the already achieved cost-reduction measures. Assuming stable
economic developments, the company is still striving for a
break-even operating result for the current financial year. The
company’s forecast of economic developments reflected in its
financial year planning takes into account the respective product
mix prevalent in the single markets. Nevertheless, the enormous
growth in financing costs will place a heavy burden on the
financial result. During the current financial year, Heidelberg
therefore anticipates a marked net loss again.
For additional details, visit the Internet Press Lounge at
www.heidelberg.com.
Other dates:
The figures for the second quarter of financial year 2010/11 are
due to be published on November 10, 2010.
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 macro-economic 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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