Heidelberg confirms Q3 results and outlines outlook
Tuesday, February 11, 2020
Heidelberg has confirmed the key figures from its preliminary Q3 report, which was published last month, and outlined its plans to “sustainably improve its profitability and liquidity”.
The German manufacturer said today (11 February) that it recorded “a stable development of sales and incoming orders” in the nine-month period from 1 April to 31 December 2019.
Its incoming orders totalled €1.9bn (£1.61bn), down slightly from the €1.912bn achieved in the same period a year earlier, while its incoming orders in Q3 were €636m, up from €606m in the previous year.
Nine-month sales of €1.69bn were down marginally from €1.693bn in the previous year, but Q3 sales dipped from €579m to €567m, which Heidelberg attributed to the reluctance to invest in Europe caused by economic uncertainty.
The Q3 EBITDA figure of €47m (excluding restructuring charges) was boosted by a €25m one-time gain following the sale of Hi-Tech Coatings, but it was confirmed last month that if this was stripped out of the figures, EBITDA slumped by 43.6% to €22m (prior year: €39m).
The manufacturer said it was negatively impacted by lower volumes, pressure on margins in the consumables trading business and regional shifts with a less favourable product mix, as well as high up-front expenditures in digital printing. It added cost-cutting measures “could not compensate for this development”.
For the first nine months, EBITDA (excluding restructuring charges) was €117m, up from €101m in the previous year.
The company’s pre-tax profit was €11m for Q3, up from €7m in the previous year, and €5m for the nine-month period, up from €1m in the equivalent period 12 months earlier. After taxes, the company made a €7m profit in Q3 but a €10m loss the nine-month period.
On 20 January, Heidelberg cut its sales and profit forecasts for the full year for the second time after a “persistently difficult market environment” hit its Q3 results.
The manufacturer expects net sales for the year as a whole to be slightly below the previous year's level of around €2.49bn. EBITDA, excluding the restructuring result and excluding the non-recurring income from the sale of Hi-Tech Coatings, is expected to be in a range of 5.5%-6% of sales and the after-tax result will accordingly be slightly negative.
Heidelberg said it is in “an advanced planning stage” with regard to the implementation of an extensive package of measures to sustainably improve its profitability and liquidity.
“We will streamline Heidelberg in organisational terms, divest non-core areas and assets and thus significantly reduce our cost base,” said Heidelberg chief financial officer Marcus Wassenberg.
“With the planned package of measures, we see good potential for significantly improving liquidity and balance sheet quality.”
A Heidelberg spokesperson told Printweek that decisions could be expected on these measures “by the end of the fiscal year”, with the impact on the company’s next fiscal year.
He said it was “too early to say” whether there might be redundancies, but added the company has early retirement programmes in progress as well as short-time working in some areas “to overcome the weakness in some product areas”.
Chief executive Rainer Hundsdörfer said the manufacturer’s changes will enable it “to consistently adapt to the challenging market conditions”.
“[These] are currently difficult to predict, not least due to the uncertain economic impact of the coronavirus in China, our largest single market.”
The Heidelberg spokesperson told Printweek the manufacturer has received approval from the government to resume production at its Chinese factory from tomorrow. He said it was closed over the Chinese New Year period and then for one week longer than expected.
“It will take some days before we are back in full operation, but it seems that we can achieve our volume as planned.”
Heidelberg is also getting closer to its goal of increasing the share of recurring revenues from subscription offers to around one-third in the medium term, with 13% of its order backlog based on these types of projects by the end of December.
Last month Heidelberg unveiled its latest generation Speedmaster presses, which it called “the most intelligent and most automated” to date. The company said it has already received initial customer orders for the new technology.
Shares in Heidelberg were down by 1.4% to €0.89 in early trading and stood at €0.90 at the time of writing. (52-week high: €1.78, low: €0.84). The manufacturer will publish its financial statements and annual report for 2019/20 on 9 June.