Heidelberg orders up a quarter but pre-Drupa drought stymies sales
By Tim Sheahan Tuesday, 05 August 2008
Heidelberg has recorded a 23% rise in incoming orders to Euro1.151bn (£911.6m), but has experienced a drop in sales in the three months to 30 June.
The manufacturing giant's final first-quarter figures showed an increase in orders from €934m to €1.151bn year on year, while sales and earnings suffered in comparison with the same period in 2007.
The company cited difficult market conditions and reluctance by customers to invest in the run-up to Drupa.
Sales by Heidelberg in the first three months from 1 April hit €657m – €85m down on the previous year's figure of €742m.
The manufacturer's order backlog at the end of the first quarter made for better reading though, totalling €1.298bn compared to €874m in the previous quarter to 31 March 2008.
Bernhard Schreier, chief executive of Heidelberg, said: "Healthy incoming orders from Drupa will mean better operating results in the second and third quarters than in the first three months."
He added: "The trade show enabled us to underline our position as the world leader in the industry, but difficult underlying conditions are still impacting on the current market situation."
Heidelberg also recorded an operating loss of €35m in the period under review compared to the previous year profit of €26m. This led to a net loss in the first quarter of €39m, while 2007 brought in €8m in profit.
Last month, the company announced a raft of cost-cutting exercises that included shedding 500 jobs worldwide by the 2010/11 financial year.
The cuts are part of a four-tier strategy by the press giant to save €100m by the 2010/2011 financial year – €75m of which is expected in the next 18 months.
Schreier said: "The package of measures already introduced to improve our cost structure will compensate these effects in the medium term."
Heidelberg cited the purchase of Hi-Tech Coatings, the cost of Drupa, and falling sales, as factors behind a negative free cash flow in the first quarter of €211m, significantly below 2007's negative €81.
Dirk Kaliebe, chief financial officer at Heidelberg, said: "As already indicated, weak sales and additional costs led to a negative operating result for the first quarter of the financial year."
He added: "We are working hard to ensure successful implementation of the package of cost-cutting measures introduced so that the resultant savings can be achieved as planned."
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