HEIDELBERG, Germany, February 8, 2018 /PRNewswire/ --
- Digital transformation bearing fruit - subscription model attracting considerable
interest, with further growth in demand for innovative digital packaging and label
- New Heidelberg Digital Unit to significantly expand e-commerce business
- Operating result on target after nine months
- Incoming orders for third quarter 16 percent up on previous year
- Group sales match previous year's level at EUR1,657 million despite negative
- Operating result (EBITDA) improves once again to EUR105 million
- Clearly positive net result after taxes excluding non-recurring tax effect due to
U.S. tax reform
- Sights still set on operating targets for financial year 2017/2018 as a whole -
even more confidence in medium-term outlook
After nine months of financial year 2017/2018 (April 1 to December 31, 2017), the digital transformation initiated at Heidelberger Druckmaschinen AG (Heidelberg) is increasingly taking shape. Among other things, initial agreements have been signed under the new subscription model whereby customers are ensured a performance product comprising press, services, consumables, and software over a period of several years. The successful market launch of this new business model is a further important step toward achieving the future growth targets. The demand for innovative digital presses remains high, with a recent significant increase in incoming orders in virtually all regions. What's more, the Heidelberg Digital Unit provides a new competence center for digital marketing and e-commerce. Among other things, this is intended to triple e-commerce sales in the years ahead to some EUR300 million. Furthermore, series production of the Heidelberg Assistant has started, initially in four countries. This will provide customers with digital support throughout the life cycle of their products.
Slight improvement in sales after adjustment for exchange rate movements - incoming orders significantly up in third quarter
Operationally speaking, Heidelberg is on course to achieve its annual targets for financial year 2017/2018. At EUR1,657 million, Group sales were a little down on the previous year's figure of EUR1,680 million but slightly up on the comparative period if negative exchange-rate effects from Asia and the U.S. amounting to some EUR39 million are not taken into consideration. Driven by the above-mentioned high demand for digital product and business models, incoming orders developed encouragingly in the third quarter of the financial year, increasing by more than 16 percent from EUR582 million to EUR678 million. Virtually all regions that are of relevance for Heidelberg recorded improvements, especially Europe and the U.S. The order backlog of EUR693 million at December 31, 2017 was at a very good level for a post-drupa year.
"Heidelberg is systematically transforming into a modern digital technology company. The considerable customer demand for our new digital solutions is just what we were hoping for. 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. Our medium-term target of using technological leadership, digital transformation, and operational excellence to generate sales of some EUR3 billion and a net profit after taxes in excess of EUR100 million is increasingly within our grasp," commented Heidelberg CEO Rainer Hundsdörfer.
EBITDA improves to EUR105 million
Profitability rose further compared with the previous year's figures. After three quarters, EBITDA excluding restructuring result climbed from EUR94 million to EUR105 million. As a result, the EBITDA margin after nine months was 6.3 percent after a figure of 5.6 percent in the previous year. EBIT excluding restructuring result totaled EUR54 million (previous year: EUR43 million). Far lower financing costs resulted in the financial result improving from EUR-42 million to EUR-36 million. As communicated in December, the U.S. tax reform led to one-time non-cash burdens of around EUR25 million. Consequently, the net result after taxes was at the previous year's level of EUR-10 million. Without this special item, the result would have been clearly positive.
The free cash flow (EUR-20 million, previous year: EUR-10 million) was influenced by the acquisitions and investments made in the period under review in connection with constructing the new innovation center in Wiesloch. A positive figure of EUR12 million was achieved in the third quarter. The improvements at operating level and the conversion of a convertible bond in July 2017 led to an increase in shareholders' equity to EUR345 million (previous year: EUR246 million). The equity ratio thus rose to some 16 percent (previous year: approximately 11 percent). The net financial debt at December 31, 2017 fell to EUR244 million (previous year: EUR282 million) and the leverage was still significantly lower than the target value of 2 at 1.3 (previous year: 1.7).
"Our financing structure is very solid. We have a low leverage and maintain sufficient liquidity to finance our planned investments in new business models," said Heidelberg CFO Dirk Kaliebe. "In addition, further acquisitions might become an option, if they help speed up our digital transformation."
Sights still set on operating targets for financial year 2017/2018 as a whole
At the end of December, the U.S. tax reform led the company to change its conditional forecast for the net result after taxes made at the beginning of the financial year. After initially expecting a further moderate increase over the previous year, Heidelberg is now predicting that the result for financial year 2017/2018 will be significantly down on the previous year's figure (EUR36 million).
In terms of the annual operating targets, this means that - adjusted for the above-mentioned special tax effect - Heidelberg is standing by its guidance published with the figures for the second quarter of 2017/2018 on November 9, 2017.
Net sales should be around the same level as in the previous year. As already communicated, developments in North America are looking brighter in the second half of the financial year, but exchange-rate effects in Asia and from the U.S. dollar in particular, as well as the deliberate reduction in business with remarketed equipment, are continuing to have a negative impact on business. In financial year 2017/2018, the company is still aiming to achieve an EBITDA margin in the region of 7 to 7.5 percent through measures to boost efficiency. The further improved financial result will have a positive impact on the net result after taxes, but the above-mentioned non-recurring costs resulting from the U.S. tax reform will have a negative one-time effect.
As planned, the strategic focus in financial year 2017/2018 is on initiating and implementing the strategic measures that form part of 'Heidelberg goes digital!' - strengthening the company's technology leadership, digital transformation of the business model, and achieving operational excellence. These measures are already starting to have a positive impact and will play a key role in achieving the company's medium-term targets. Confidence about this has grown further as the financial year has progressed.
Image material, the interim report for the first nine months of financial year 2017/2018, and additional information about the company are available in the Press Lounge of Heidelberger Druckmaschinen AG at http://www.heidelberg.com.
Heidelberg IR now on Twitter:
Link to the IR Twitter channel: https://twitter.com/Heidelberg_IR
On Twitter under the name: @Heidelberg_IR
The Press Conference for the 2017/2018 financial year is scheduled for June 12, 2018.
This press release contains forward-looking statements based on assumptions and estimations by the Management Board of Heidelberger Druckmaschinen Aktiengesellschaft. Even though the Management Board is of the opinion that those assumptions and estimations are realistic, the actual future development and results may deviate substantially from these forward-looking statements due to various factors, such as changes in the macro-economic situation, in the exchange rates, in the interest rates and in the print media industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no warranty and does not assume liability for any damages in case the future development and the projected results do not correspond with the forward-looking statements contained in this press release.
Heidelberger Druckmaschinen AG
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