Heidelberg sales growth in line with group planning

Richard Stuart-Turner
Friday, November 13, 2015

Heidelberg has reported increased sales in its half-year results, following its recent acquisition of the Printing Systems Group (PSG), as well as positive exchange rate movements.

Half-year group sales for the 2015/2016 financial year, which covers the period from 1 April to 30 September 2015, were €1.16bn (£824m), up from €996m on the equivalent period last year.

Q2 sales alone were €599m, up from €563m in Q1. The growth is in line with the company's expectations.

Heidelberg said all of its regional operations achieved higher sales apart from Eastern Europe, which remained stable.

Order intake for the first half was up 13.4% on the first half of 2014/15 at €1.3bn. For Q2 it was €620m, down 11.8% compared to Q1, though the firm said high Q1 orders were driven by a successful outing at the Print China show in April.

The group said it made further progress in restructuring, saying the firm's growth areas of service and digital had undergone "considerable expansion" while structures and processes have been made leaner in the sheetfed business.

Heidelberg's acquisition of the PSG in March increased the group's service and consumables sales as planned. Heidelberg said half of the planned additional sales of €100m from the takeover have been generated after six months.

"After the first half of the current financial year, we are on course to achieve our targets for the year,” said Heidelberg chief financial officer Dirk Kaliebe, who is also interim chief executive while Gerold Linzbach is on sick leave.

“As in previous years, we are expecting a further increase in sales and in the results for the second half of the financial year.”

Sales at Heidelberg Equipment jumped by 19.3% to €581m compared to the first half of 2014/2015. In Q2 the division made €304m, up 4.1% from Q1.

The company said the rise was being driven by the further increase in the order backlog at the end of Q2 and positive effects resulting from the portfolio measures.

EBITDA for the division fell from €17m to €10m in the first half of 2015/16 compared to last year while for Q2 alone it was €2m, down from €8m in Q1.

Sales at Heidelberg’s Services wing, which includes post-press products following a restructure of that operation, rose by 14.5% to €578m in the first half of 2015/2016, compared to the same period last year. Q2 sales alone were €294m, a rise of 3.5% on Q1.

Compared to the same period last year, EBITDA in Services more than doubled compared to last year to €67m (€32m in the first half of 2014/15). However, Q2 EBITDA in the division fell by 16.2% to €31m year on year.

Heidelberg said it is planning further acquisitions in this growth segment in the future and is expecting services and consumables to account for around 50% of group sales in the medium term.

The period also saw the group launch a new digital label press for the packaging market and make further inroads into the field of '4D printing' with its Jetmaster Dimension inkjet system.

The business said its unveiling of the first industrial sheetfed digital press at Drupa next year will mark the next milestone in its digital strategy.

The company also highlighted the recent relocation of its headquarters and the Print Media Center Commercial from Heidelberg to Wiesloch-Walldorf.

Together with the Print Media Center Packaging, the firm claimed that Wiesloch-Walldorf now houses the industry’s largest demonstration centre for commercial and packaging printing in the world, with a combined space of around 10,000sqm.

“New business models and a dynamic portfolio have led to a significant increase in sales,” said Kaliebe.

“The reorientation of Heidelberg has also made us more flexible, which means we are better able to respond to market fluctuations and can further improve profitability.”

Heidelberg is targeting sales growth of 2%-4% for the full year, with EBITDA margins of between 4%-6% in equipment and 9%-11% in services, to give an overall margin of at least 8%.

Overall, the group posted a first half net loss of €14m, compared with a €42m loss at the same stage the prior year. A Heidelberg spokesman said the business is expecting to achieve a net profit by the end of the financial year. 

At the end of the half-year, Heidelberg employed 11,753 staff worldwide, which includes the 384 who joined the group from PSG. This is a reduction of 640 positions on the prior year, which Heidelberg said was mainly a result of restructuring in the traditional sheetfed and post-press areas of the business.

Heidelberg's share price had dropped 15.5% to €2.29 at the time of writing.

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