Heidelberg: 'comprehensive transformation' is paying off

Sheetfed press assembly at Heidelberg's Wiesloch facility
Sheetfed press assembly at Heidelberg's Wiesloch facility

Heidelberg CEO Rainer Hundsdörfer said the business was now “leaner and more efficient”, and is poised to return to profitability in 2022/23 on the back of a raft of growth initiatives including offering Prinect as a cloud-based contract model.

Announcing its year-end results for the 2020/21 financial year, the group confirmed the better-than-expected performance trailed in April. 

Sales slightly exceeded expectations at €1.913bn (£1.64bn), down on the pre-pandemic prior year of €2.349bn.

“Due to an uptick in demand – in particular in China, parts of Europe, and in the final quarter in the United States as well – incoming orders increased to around €2bn at the end of the financial year,” Heidelberg stated, with the order backlog increased to €636m “which creates a good basis for the new financial year”.

EBITDA excluding restructuring costs rose from €102m to €146m, boosted by €85m in savings from its transformation programme, €100m benefit from short-time working, €75m from restructuring its pension scheme, and €19m from the sales of CERM, BluePrint Products and Hi-Tech Chemicals. 

Heidelberg’s proposed sale of label press division Gallus fell through in January. The business will now remain with Heidelberg. 

A spokesman told Printweek: “Gallus has made good operational progress with an independent setup under the Heidelberg umbrella and with a focus on its growing market in flexographic printing. Gallus will continue along this successful path.”

The bottom line loss for the group after taxes was €43m compared with the prior year’s huge €343m loss. 

Hundsdörfer said the group planned to focus on the key growth drivers of digital business models, packaging, opportunities in China, and e-mobility. 

Its fast-growing Wallbox business is being spun off into a new standalone operation, HEI Charge. 

“The comprehensive transformation Heidelberg initiated before the coronavirus pandemic hit has made the company leaner and more efficient. Given that demand is now also definitely picking up again in most key sales regions, we’re expecting to achieve a far better operating margin this year, including a slightly positive net result after taxes,” Hundsdörfer said.

The group aims to increase sales from its contract/subscription model business from around €200m today, to more than €450m by 2026. The expansion plan includes switching Prinect to a cloud-based contract model, expanding the Zaikio supplier-agnostic collaboration platform, and developing additional SaaS offerings for the Chinese market. 

The spokesman said the on-site Prinect offering would continue.

“We are working on the cloud intensively, the first cloud module (Smart BI) is already released. We are planning to release more modules in the upcoming years which will be linked to the on-premise solution. 

“Cloud modules and the on-premise solution will be co-existent.”

Heidelberg also said it wanted to “grow faster than the market” in packaging, through end-to-end automated systems from reel to finished pack. 

The group also plans to make further gains from its existing assets. The previously announced sale of some of surplus land at its Wiesloch site will be included in the results for the new financial year.  

CFO Marcus Wassenberg stated: “We’re delighted that all our efforts during the crisis in financial year 2020/2021 are now bearing fruit. Heidelberg is back on a solid financial footing, is fully focused, has become far more efficient, and is benefiting from excellent growth potential in various regions and areas of business.”

Heidelberg said that by 2022/23 it would be able to break-even on sales of 1.9bn, and would benefits from the full effect of a €170m reduction in costs. 

For the 2021/22 financial year Heidelberg expects sales to increase to “at least” €2bn, to be back in the black on the bottom line, and to increase EBITDA margins from 5% to 6%-7%.

Despite the positive statements, Heidelberg’s share price fell back on the news, and was down by nearly 12% at €1.65 at the time of writing (52-week high: €1.96, low: €0.47).