Heidelberg slims losses, but signals further restructuring

Jo Francis
Wednesday, November 12, 2014

Heidelberg has made two further acquisitions – in consumables and software – but further restructuring is on the cards at the manufacturer’s core printing press operations.

The group announced the purchases of Belgian press consumables manufacturer Blueprint Products, and German web-to-print and multi-channel publishing software firm Neo7even, along with its half-year results today.

It has been working with both businesses for some time.

Recent pronouncements by chief executive Gerold Linzbach had pointed at the possibility of a further purchase in the consumables space, which he described as “high margin and less cyclical”.

Terms of the acquisitions were not disclosed.

Linzbach said the firm would be taking further steps to enhance its portfolio. “This will involve further expanding growth areas to enhance the company’s profitability and secure it long-term.”

His aim is to grow services and consumables to be more than half of group sales.

In the six months to 30 September sales at the press giant fell 9.2% to €996m (£778m), despite the inclusion of Gallus, acquired in June.

Incoming orders slipped from €1.26bn to €1.17bn, while the order backlog reduced to €560m from €598m.

Heidelberg pointed to a number of factors for the sales fall, including a slowdown in China, its ongoing portfolio optimisation measures and its focus on actively reducing low-margin business.

It said sales were in line with expectations, with the exception of Asia.

The group also warned that sales for the full year would be down by circa 5%.

The full effects of its decision in August to streamline its post-press operations are yet to flow through.

Heidelberg has now formally signed a cooperation agreement with Masterwork Machinery of China for the future development of packaging post-press products, and this agreement appears likely to be extended into other areas. “The two companies have also agreed to consider joint production of components in China,” Heidelberg stated. 

EBITDA at the half-year rose from €31m to €53m, but restructuring costs rose to €18m (2013: €1m).

It reiterated its EBITDA target of 8% for the full year.

The bottom-line loss was €42m (2013 loss: €47m).

Heidelberg’s equipment division reduced its losses substantially, from €49m to €27m. It expects a €30m improvement in the division’s results as a result of the post-press restructure.

However, Heidelberg is also looking to improve the performance of its core sheetfed printing press operations by increasing the flexibility of its set-up. New measures will include further work on modularisation and standardisation, as well as an unspecified number of job cuts.

“As part of these measures, the break-even point for operating profit in this areas is to be lowered further by the year-end by adjusting personnel capacity,” Heidelberg said.

Further details were unavailable at the time of writing.

Heidelberg’s share price fell by 3.57% to €2.16 in early trading.

Separately, a former employee of Heidelberg’s Wiesloch plant has been jailed for three years and two months for fraud, after faking the sale of €800,000 worth of spare parts to subsidiaries in America over a five-year period.

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