Heidelberg on Track After Nine Months of Financial Year 2012/2013

HEIDELBERG, GERMANY—February 7, 2013—After nine months of financial year 2012/2013 (April 1 to December 31, 2012), Heidelberger Druckmaschinen AG (Heidelberg) is on track to achieve its operating targets for the current financial year.

In the quarter under review (October 1 to December 31, 2012), higher sales and savings from the Focus 2012 efficiency program resulted in a much improved operating result as planned. Quarterly sales were 9 percent up on the same period of the previous year, increasing from EUR 631 million to EUR 688 million. The operating result (EBIT) excluding special items increased by EUR 23 million to EUR 25 million (previous year: EUR 2 million).

Improvements in EBIT and the financial result led to a positive income before taxes of EUR 5 million after a negative result of EUR -25 million in the same quarter of the previous year. Thanks to positive tax effects in the reporting period, the net result rose to EUR 16 million (previous year: EUR -14 million).

“The financial year is going according to plan. The third quarter reflects the progress we had expected in terms of earnings. We are systematically moving toward our target of returning to profitability by the end of financial year 2013/2014. We are on the right track,” said Heidelberg CEO Gerold Linzbach.

Sound financing structure—clearly positive free cash flow
Due to the improved result and consistent asset management, the company recorded a clearly positive free cash flow of EUR 28 million in the third quarter, which is EUR 32 million up on the previous year. Also in the third quarter, the net financial debt fell by EUR 32 million compared with the previous quarter to EUR 325 million (balance sheet date December 31, 2012). As expected, the net financial debt was higher than at the end of the previous financial year (when it was EUR 243 million) due to the greater need for funds to process the orders received at the drupa trade show and the payments relating to Focus 2012. The company's financing structure still shows appropriate diversification in terms of both financing sources and maturity profile. Heidelberg therefore has a stable liquidity framework providing ample room for maneuver.

“The Focus 2012 efficiency program is progressing according to plan and is significantly improving our profitability. We have also made good progress with further reducing the company's debt. The clearly positive free cash flow shows we are definitely heading in the right direction,” said Heidelberg CFO Dirk Kaliebe.

Nine-month figures in line with planning
In the first nine months, group sales were 5 percent up on the same period of the previous year at EUR 1,905 million (previous year: EUR 1,811 million).

As expected, the operating result (EBIT) excluding special items after nine months was still negative at EUR -32 million. When comparing this with the figure for the same period of the previous year (EUR -19 million), it is essential to take into account the high non-recurring costs for the drupa trade show in May 2012.

The special items totaling EUR 24 million after nine months were primarily the result of expenditure relating to the Focus 2012 efficiency program. At EUR -55 million, the negative impact of the financial result was EUR 7 million less than in the previous year.

The income before taxes after three quarters thus remained negative at EUR -111 million (previous year: EUR -91 million). Thanks to positive tax effects, the net result for the period under review was EUR -88 million (previous year: EUR -79 million).

As a result of the drupa trade show in May 2012, incoming orders after nine months rose 12 percent, from EUR 1,975 million to EUR 2,203 million. The order backlog remained unchanged year on year at EUR 728 million.

As of December 31, 2012, Heidelberg had a workforce of 14,563 worldwide (previous year: 15,666). This headcount has fallen by around 1,100 in the past year.

Outlook for financial years 2012/2013 and 2013/2014 confirmed
Heidelberg continues to assume that there will be a clearly positive result of activities excluding special items for financial year 2012/2013 as a whole. Over one-third of the planned savings from Focus 2012 will already take effect in the current financial year. The expenditures required for this purpose, however, will negatively impact the financial result and the free cash flow in both the current and the forthcoming financial year. Net financial debt will increase year-on-year in the current financial year 2012/2013.

In the coming financial year 2013/2014, the cost reductions resulting from FOCUS 2012 will be fully effective for the first time and result in annual savings of around EUR 180 million. The half-year forecast of achieving a net profit for the year remains unchanged.

“We are well aware that a one-time cost-cutting program such as Focus 2012 alone cannot safeguard the future of Heidelberg. Just like our successful customers, we must be dynamic in focusing our portfolio on profitable segments. We will ensure this through our organization based on business areas. Focus 2012 is highlighting potential for making our structures and processes more efficient on an ongoing basis. We can't fight changes in the industry, so we need to respond quickly and harness the opportunities they present,” said Linzbach.

The full report on the third quarter of financial year 2012/2013, further information about the company, and image material are available at www.heidelberg.com.

Source: Heidelberg.