The positive development in the operational business at
Heidelberger Druckmaschinen AG (Heidelberg) (FWB: HDD) continued in
the first six months of financial year 2010/2011. In the second
quarter (July 1 to September 30, 2010) both incoming orders and
sales were significantly up on the previous year.
Incoming orders for the second quarter of financial year
2010/2011 improved from EUR 534 million the previous year to EUR
650 million. This was partly due to positive exchange rate effects
amounting to some EUR 39 million. As expected and in line with the
company's own planning, incoming orders were down on the first
quarter of the current financial year, which was boosted by special
items such as the IPEX exhibition in the United Kingdom and the
ExpoPrint trade show in Brazil. Compared to the same six months of
the previous year, incoming orders were up 33 percent (25 percent
after adjustment for exchange rate effects) to EUR 1.436
billion (previous year: EUR 1.084 billion).
The Heidelberg Group's order backlog in the second
quarter was 27 percent up on the previous year's figure of EUR 617
million at EUR 781 million.
Thanks to the high level of orders, net sales in the
second quarter were up 27 percent on the previous year (19 percent
after adjustment for exchange rate effects) at EUR 633 million.
This is also higher than the previous quarter's figure of EUR 563
million. In the first six months of the current financial year,
sales totaled EUR 1.196 billion and were thus 18 percent up on the
previous year's figure of EUR 1.013 billion (11 percent after
adjustment for exchange rate effects).
“The continuing economic recovery made our customers more
willing to invest in the first half-year, but developments varied
greatly from region to region. While Asia, Latin America, and
Europe are all seeing growth, there is still no significant
recovery in evidence on the key U.S. market,” said Heidelberg Group
CEO Bernhard Schreier. “The positive development in operational
business in the first half-year shows that we are on the right
track with our strategic realignment. This confirms our forecast
for the year as a whole,” he added.
In the second quarter, Heidelberg achieved a significant
improvement in its result of operating activities excluding
special items – to EUR -6 million (previous year: EUR -65 million).
The cumulative operating result for the first half-year was EUR -41
million. This follows a figure of EUR -128 million for the same
period the previous year. The improvement was primarily due to
lower costs resulting from the successful restructuring measures
and to higher sales revenues. The release of provisions capitalized
the previous year resulted in income of EUR 22 million from special
items (previous year: costs of EUR 11 million).
The financial result in the second quarter was EUR -52
million (previous year: EUR -27 million). Financing costs and
non-recurring expenditures linked to the repayment of financial
liabilities from the proceeds of the capital increase were among
the items having a negative impact on this result. In the first
half-year, the financial result worsened from the previous year's
figure of EUR -49 million to EUR -87 million.
The net result for the first half-year was EUR -88
million (previous year: EUR -147 million).
Despite outflows associated with restructuring measures,
Heidelberg achieved a positive free cash flow of EUR 7
million in the second quarter. In the first half-year, the free
cash flow improved substantially to EUR 69 million following a
figure of EUR -18 million in the previous year.
“The restructuring measures of recent years are paying off, as
demonstrated by the continued improvement in the operating result
and free cash flow,” said Heidelberg CFO Dirk Kaliebe. “What's
more, we have used all the proceeds from the successful capital
increase to repay our liabilities and have thus significantly
reduced our financial burden. Heidelberg now has a much more stable
capital structure and is on track to become profitable,” he
added.
Capital increase successfully completed
In the second quarter, Heidelberg successfully completed its
capital increase. All the net proceeds of around EUR 400 million
have been used to repay financial liabilities and strengthen the
company's equity base. This has enabled Heidelberg to reduce its
net financial debt by EUR 386 million to EUR 243 million in the
second quarter, which has boosted the equity ratio from 18.3
percent in the previous quarter to 29.6 percent at the end of the
second quarter.
As at September 30, 2010, Heidelberg had 16,228 employees
worldwide. The workforce fell by a total of 268 in the first
half-year.
Business results in the divisions
In the Heidelberg Equipment Division, incoming orders for
the first half-year were 49 percent up on the previous year
(41 percent after adjustment for exchange rate effects) at EUR 875
million. Medium- and large-format sheetfed offset presses enjoyed
particularly strong growth. Incoming orders in the second quarter
were down on the figure for the first quarter because the start of
the financial year was boosted by positive special items such as
the IPEX and ExpoPrint trade shows. Sales in the first half-year
were up 21 percent on the previous year (15 percent after
adjustment for exchange rate effects) at EUR 649 million. The
operating result excluding special items for the first six months
was EUR 34 million better than the previous year at EUR -87
million. The savings achieved by the program of cost-cutting
measures and the company's reorganization had a positive impact on
this result.
In the less cyclical Heidelberg Services Division,
incoming orders of EUR 272 million in the quarter under review
matched the first quarter's high level. In the first half-year,
incoming orders were thus a total of 14 percent up on the previous
year (6 percent after adjustment for exchange rate effects) at EUR
552 million. The continued recovery was also apparent in the sales
figure for the first six months of the financial year, which rose
by 15 percent (7 percent after adjustment for exchange rate
effects) to EUR 538 million. The operating result excluding special
items for the first six months improved by a significant EUR 48
million to EUR 37 million. Heidelberg Services benefited from
higher sales linked to a more favorable sales mix that included a
greater proportion of products with better profit margins, and from
the savings achieved as a result of the reorganization.
In the quarter under review, the Heidelberg Financial
Services Division once again recorded a positive operating
result. The result for the first half-year was EUR 9 million
(previous year: EUR 4 million).
Business developments in the regions
Overall, the global economic recovery in the first half-year led
to positive business developments, but the situation varied
considerably from region to region. In the Europe, Middle East
& Africa region, incoming orders in the second quarter were
up 17 percent on the previous year at EUR 231 million. The main
factor in this improvement was the greater willingness of customers
in Germany and the United Kingdom to invest. As expected, however,
orders did not match the high level of the first quarter, which was
boosted by special items such as high incoming orders generated at
the IPEX trade show. Net sales were EUR 28 million up on the
first quarter. In the first half-year, sales roughly matched the
previous year's level at EUR 470 million. In the Eastern
Europe region, incoming orders in the second quarter were
slightly higher than the previous year at EUR 63 million. In the
first half-year, they rose by a total of 28 percent to EUR 147
million. Net sales far exceeded the figures for both the previous
quarter and the previous year. Higher incoming orders in Poland,
Russia, and Turkey played a key role in this positive development.
In the North America region, incoming orders for the second
quarter were slightly higher at EUR 81 million. After adjustment
for exchange rate effects, orders for the first half-year as a
whole were only 3 percent up on the previous year and sales for
this period were 12 percent down on the previous year's level at
EUR 139 million. The development of incoming orders in the Latin
America region, on the other hand, was very positive. The
figure for the second quarter was 74 percent higher than the
previous year at EUR 47 million. One of the driving forces behind
this positive development was the growing demand in Brazil, which
was boosted by the ExpoPrint industry trade show. Net sales in the
first half-year were also much better, increasing by around 79
percent to EUR 59 million. Growth continued in the
Asia/Pacific region, above all thanks to the continued
positive developments in China. In the second quarter, incoming
orders were up 33 percent on the previous year at EUR 228 million.
Although this did not match the high level of incoming orders in
the first quarter, over the first six months as a whole it
represents a 24 percent increase over the same period the previous
year after adjustment for exchange rate effects. Net sales in the
first half-year were 26 percent up at EUR 398 million, once again
after adjustment for exchange rate effects.
Outlook
For the current financial year 2010/2011, Heidelberg is still
expecting to see a modest growth in sales. The result of operating
activities will benefit from increasing profit contributions and
the savings achieved so far. Heidelberg is looking to achieve a
break-even operating result in the current financial year, provided
the economic situation remains stable. The forecast of economic
developments reflected in the company’s financial year planning
takes into account the respective product mix prevalent in the
individual markets. We continue to focus on limiting the commitment
of funds; the previous huge increase in financing costs and the
non-recurring expenditures linked to the repayment of financial
liabilities from the proceeds of the capital increase will have a
very negative impact on the financial result. However, the
repayment of liabilities made possible by the successful capital
increase will have a mitigating effect in the remaining months of
the current financial year. During the current financial year, a
marked net loss is still expected.
For additional details, visit the Internet Press Lounge at
www.heidelberg.com.
Other dates:
The figures for the third quarter of financial year 2010/2011
are due to be published on February 9, 2011.
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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