Heidelberg predicts profits to return next year

The worlds biggest offset press manufacturer Heidelberg says an improving order situation and the increasingly positive impact of the Group’s extensive transformation, mean it will be returning to profitable growth in the new financial year, to March 2022.

It says after two years of losses, a positive net result after taxes is also likely to be achieved, thanks to a sustained improvement in the financial result.

It says despite the continuing uncertainties regarding the duration and scope of the negative effects of the Covid-19 pandemic in financial year 2021/2022, the company is therefore expecting sales to climb from €1.91bn to at least €2bn.

“The comprehensive transformation Heidelberg initiated before the coronavirus pandemic hit has made the company leaner and more efficient. Given that demand is now also definitely picking up again in most key sales regions, we’re expecting to achieve a far better operating margin this year, including a slightly positive net result after taxes. The considerable growth potential offered by packaging printing, digital business models, business in China, and new technologies such as wallboxes is also making us confident about the years ahead,” comments Heidelberg CEO Rainer Hundsdörfer.

The company predicts that profitability will grow more strongly than sales. For example, the expected increase in sales, the lower cost base, and the fact that significant restructuring costs of some five per cent (including restructuring result) will no longer need to be met, means the EBITDA margin is set to increase to between six and seven per cent.

Heidelberg says a positive result in the 2021/22 will not be a one off, and says with solid economic development, this profitable upward trend looks set to continue in subsequent years, too. It says this is down to the company’s successful implementation of realignment measures, the focus on its profitable core business, and the expansion of growth areas.
Cost savings totaling €170m are expected to have taken full effect in financial year 2022/2023 and the Group’s operating break-even point is likely to have decreased to around €1.9bn.

Heidelberg sees considerable potential for sustained growth and increases in value in the future – above all for packaging printing, digital business models, business in China, and new technology applications.

Heidelberg Wallbox sales – the electric car charger – have helped more than double overall e-mobility revenue to €20m, and the company is working on a further massive expansion of its capacities in order to meet dynamic growth in demand. Despite the sums being invested in this expansion, its e-mobility business is already turning a profit.

“We’re delighted that all our efforts during the crisis in financial year 2020/2021 are now bearing fruit. Heidelberg is back on a solid financial footing, is fully focused, has become far more efficient, and is benefiting from excellent growth potential in various regions and areas of business,” emphasizes CFO Marcus Wassenberg.

Thanks to a strong final quarter, Heidelberg generated sales of some €1.91bn in financial year 2020/2021. The pandemic resulted in the company failing by some margin to match the previous year’s figure of€2.35bn. Due to an uptick in demand – in particular in China, parts of Europe, and in the final quarter in the United States as well – incoming orders increased to around €2bn at the end of the financial year. year.

Thanks to the positive impact of the transformation program, EBITDA excluding restructuring result in financial year 2020/2021 stood at €146m, a clear improvement on the previous year of €102m.

due to the further marked reduction in the actuarial interest rate for the valuation of pension obligations in Germany, but this was significantly up on the figure of just 2.6 percent after the third quarter. The equity ratio for the parent company, Heidelberger Druckmaschinen AG, remains at a solid level of around 28 percent.

After the order situation picked up considerably toward the end of the past financial year, especially in China but also increasingly in Europe and North America, Heidelberg is cautiously confident about the financial year 2021/2022 even in the face of the sustained uncertainty surrounding the negative impact of the Covid-19 pandemic. This positive outlook is shared by the industry association VDMA, not least since there are hopes that the business situation in North America will also see a sustained upturn.

While packaging printing quickly returned to pre-crisis levels and is set to see further growth, advertising printing is likely to take longer to recover from the impact of the pandemic.

All in all, Heidelberg does not expect the global print volume to fully return to pre-pandemic levels just yet. Due to the systematic implementation of strategic measures in the area of packaging, the expansion of digital business models and the planned business growth in China in particular, Heidelberg will benefit from the recovery in these sub-markets and further strengthen its market position.