Heidelberg downsizes board: Plenz to depart
Wednesday, November 6, 2019
Heidelberg will part company with its longest-serving main board member as part of a raft of cost-saving measures, while the group’s share price has jumped by 10% on the back of better Q2 results.
Alongside the results, which saw sales increase by 9% to €622m (£535m) and EBITDA excluding restructuring costs jump 28% to €55m in the three months to 30 September, Heidelberg announced that chief technology officer Stephan Plenz would be leaving the company next June at the end of his current contract.
Plenz has worked at the business for more than 30 years and is responsible for sheetfed, digital, label and post-press equipment as well as R&D.
His responsibilities will be split between chief executive Rainer Hundsdörfer who will handle technology, sales and digitisation will come under chief digital officer Ulrich Hermann, while newly-appointed CFO Marcus Wassenberg will handle purchasing.
Hundsdörfer told Printweek that the business was grateful to Plenz, who joined the main board 11 years ago, and praised his outstanding contribution over the years.
“We honour all that he has done for the company. He pushed the board to start our manufacturing plant in China and that is a big part of his achievement,” he said.
Plenz is viewed as an important point of contact for key customers due to his depth of industry and technical knowledge. Hundsdörfer said those responsibilities would be devolved within the organisation.
“In the second and third level reporting to Stephan we have a number of very capable people with the same knowledge that he has. We will use them and encourage them to take more responsibility than today and that’s a big opportunity,” he said.
“We are flattening hierarchies and it’s the right signal that this should start at the top. I believe there are more opportunities to move Heidelberg forward faster than there are risks at this time.”
As well as downsizing the management board, Heidelberg plans to “further improve cost discipline” and improve liquidity by €100m “as quickly as possible” Wassenberg said.
It will cut planned investments by €20m, and free up €50m by optimising inventory levels, throughput times and receivables.
As-yet-unspecified “portfolio adjustments” that could see some activities discontinued, together with further restructuring, is expected to generate around €30m.
Alongside the Q2 and first-half results Heidelberg said that business in the UK, Germany and central Europe “remained difficult” while sales of Push-to-Stop presses were up in the US and China.
“Our unequivocal focus is on increasing profitability, on optimising net working capital, and on asset management,” Wassenberg stated, citing the “increasingly difficult economic climate”.
Heidelberg's report stated: "To strengthen profitability we must think about cooperations, more focus and reorganisation of the structure", which the firm said was "not yet efficient".
First half sales nudged up from €1.114bn to €1.124bn.
Subscription contracts accounted for around 12% of the order backlog in Q2, and Heidelberg expects recurring business to make up about a third of total revenue in the medium-term.
Restructuring costs in Q2 were €1m (prior year: €6m) but were the same year-on-year for the half-year, at €5m.
Although the Q2 profit after tax increased to €14m (prior year: €8m), the half-year after-tax loss increased from €6.4m to €16.4m.
Net debt increased to €416m at the half-year from €320m last year, in part due to a €59m hit because of the first time implementation of reporting standard IFRS16.
Heidelberg’s share price jumped by more than 12% to €1.34 on the results (52-week high: €2.13, low: €0.84).
When Plenz departs next year it will mean that all of Heidelberg's management board will have spent fewer than four years at the company.