Heidelberg lays out ambitions for new subs model

By Jo Francis, Thursday 08 February 2018

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Heidelberg has more than 100 potential customers lined up for its new subscription pay-per-use business model, and is also targeting the offering at printers using presses from competitors.

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Heidelberg: "we are selling performance"

The manufacturer is rolling out the subscription service as part of its "Heidelberg goes digital" business strategy, and is actively targeting printers that have a clear growth plan.

The first customer is German folding carton group Weig, which is adopting the subscription offering as part of a revamp of its Emskirchen plant. It has agreed a five-year deal.

"Under the new business model, Heidelberg will no longer make its money by supplying press components, but solely by achieving agreed productivity and growth targets,” said Toni Steffens, commercial director at Weig Packaging.

Heidelberg also said that the raft of initial agreements was opening new doors and were "primarily with competitors' customers". In that case Heidelberg will supply consumables and business services only.

A Heidelberg spokesman said: "In the past we were very much focused on selling machines. Now we are selling performance. We can help our customers become more competitive with this subscription model, it's a win-win. And printers using competitive machines can now find a solution with us – they are convinced of this business approach."

Heidelberg said the new model would grow its market share in the consumables arena, and deliver increased profits from growing customers. It cited an average recurring revenue figure of at least €1m (£875k) per press, per year and said the 100 customers already identified had a potential value of €600m.

PrintWeek understands that a pipeline of UK subscription customers is already in place, with more details to be announced later this month.

Speaking as Heidelberg announced its Q3 results, chief executive Rainer Hundsdörfer said Heidelberg was "systematically transforming" into a modern digital technology company and said that a sales target of €3bn and net profit after tax of €100m was "increasingly within our grasp".   

"The considerable customer demand for our new digital solutions is just what we were hoping for," he stated. "This applies to the subscription models setting a new trend in our sector, our e-commerce offerings of the new Digital unit, and our industrial digital presses for packaging and labels."  

As part of its new strategy Heidelberg is also deliberately reducing the amount of used machinery it handles and will take a more focused approach targeted at higher-value machines.   

In the third quarter Heidelberg posted sales up 16% to €678m, although sales for the first nine months of its financial year slipped by 1.4% at €1.7bn due to negative exchange rate effects.  

EBITDA excluding restructuring charges increased from €94m to €104m for the first nine months, and margins increased from 5.6% to 6.3%. Restructuring charges were €1m.   

The US tax reforms resulted in a €25m non-cash charge that propelled Heidelberg to a net loss after taxes of €10m, the same as the prior year. The firm said it would have had a "clearly positive" result if not for the tax changes in the US.  

Heidelberg's shares rose by 7.12% to €2.86 on the news. 

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