Landmark profit at Heidelberg

Jo Francis
Friday, November 10, 2017

Heidelberg has posted a first-half profit for the first time in a decade.

The world’s largest manufacturer of printing equipment announced details of new products and initiatives to increase future profitability at alongside its results for the six months to 30 September.

Sales slipped slightly on the prior year, which was boosted by Drupa orders, and the group also took an €18m (£15.9m) hit due to negative exchange rate differences.

For the six-month period sales were €1.054bn (2016: €1.072bn), while incoming orders were down 12.4% at €1.234bn. Order backlog was a “solid” €630m compared to the Drupa-inflated €765m of the prior year.

For the first time since its 2007/08 results the group also posted a net profit after tax. It reversed the prior year’s €27.7m loss and posted a net profit of €271k.

Chief executive Rainer Hundsdörfer, who joined the business a year ago, said his plans to transform Heidelberg into a “state-of-the-art digital technology group” were “progressing well”.

“We’re moving into new territory that offers enormous potential for growth,” he said.

As part of the organisational revamp instigated by Hundsdörfer, which aims to save €50m over five years through operational excellence, the group is also planning to create a less hierarchical management structure. A transformation project in this area is underway.

“We will streamline and have a leaner management structure with fewer management levels and we are working on it now. The aim is not to lay off people, the aim is to increase efficiency and effectiveness,” said a Heidelberg spokesman.

The new management structure will be instigated from April 2018.

The group also revealed the first activities as part of its plans to grow a new €50m business in digital platforms. It has partnered with Berlin-based 3D printer developer BigRep to assemble and ship its BigRep Studio product.

“We can help start-ups who have ideas but not experience of serial production,” the spokesman added. “We helped BigRep with the final design of the product and will assemble it at Wiesloch-Walldorf and also send it out to customers.

“This is a good example of the new approach.”

Further diversification has come via Heidelberg moving into own-brand charging solutions for electric vehicles, via its Heidelberg Industry division. It had already been producing this type of product as a second-tier supplier to a major car marque.

“We have expertise in charging electrical devices for printing. With this range we are accessing new markets with our current skills and processes,” the spokesman said.

The product range includes high-performance wallboxes and intelligent charging cables.

At its core printing machinery operation, Heidelberg described demand for digitally printed packaging and labels as “unabated”.

Serial production of the Primefire 106 B1 inkjet press is scheduled for the start of the New Year, and the group has just announced that it is ramping up production of the press by 50% due to demand.

Sales at its Digital Technology division increased from €523m to €533m, but weaker demand for secondhand equipment and consumables hit sales at the Digital Business & Services wing, where sales fell by 5% to €519m.

The roll-out of the new Heidelberg Assistant ‘smart print shop’ will begin at the end of the calendar year, with the US and Canada, and Germany and Switzerland the first pilot markets.

Despite a “noticeable reluctance to invest” in the North American market, and the negative impact of exchange rates in the Asian market, Heidelberg said it expected full year sales to be on a par with the prior Drupa year, and is targeting EBITDA margins of 7%-7.5%.

Hundsdörfer has set the group’s sights on achieving sales of €3bn by 2022, with a net profit of more than €100m, and is expecting its new digital product offerings to bring in an additional €500m of business.

Despite the positive outlook, Heidelberg’s share price had fallen from €3.46 at the beginning of the week to €3.17 at the time of writing. "At the beginning of the week one bank, Commerzbank, rated us from buy to hold, this is the main reason for the downturn. They reached their price target and want to see the further development of Heidelberg," said the Heidelberg spokesman.

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