Heidelberg has turned the corner, says Bernhard Schreier

Heidelberg's sales of Euro 3.661 billion (previous year: Euro 4.1 billion), down by around 11 percent on the previous year, were in line with expectations. After adjustments for exchange rate movements, sales were down six percent.

Incoming orders in the fiscal year just closed were around Euro 3.8 billion (previous year: Euro 4 billion) but were picking up near the end. In the fourth quarter alone, orders were in the region of Euro 1.0 billion.

“After three weak years, the print media industry is set for a perceptible revival,” said Bernhard Schreier, Chief Executive Officer. “The improved economic conditions and commitment to our profitable sheetfed offset operations will clearly make their mark in the current fiscal year.”

He believes that Heidelberg has turned the corner. It is a measure of how sharp the corner was that it announced a loss of Euro 695 million (previous year: Euro -138 million) for the year. Much of this came from non-recurring expenditures of Euro 569 million for restructuring costs in connection with the discontinued operations in the Digital and Web Systems divisions.

“By divesting unprofitable operations and reducing fixed costs over the long term, we were able to significantly reduce our break-even threshold,” said Dr. Herbert Meyer, the Company’s CFO. “We have thus laid the groundwork for a return to our usual high profits in the medium term.”

Promising start into the 2004/2005 fiscal year

Given the global economic recovery and the resulting improved outlook for the industry, Heidelberg is cautiously optimistic for the current fiscal year 2004/2005. At the drupa trade show in May it picked up orders for Euro 1 billion.

Agreement with Goss International ready for signing

The agreement with Goss International regarding the transfer of the Web Systems operations is ready for signing and will thereafter come into effect – subject to approval by the various national antitrust authorities – in the next few weeks.

The transaction with Goss includes Heidelberg’s commercial web and newspaper press operations as well as finishing equipment for web presses in the USA. Heidelberg will have a 15 percent holding in Goss International.

A non-disclosure agreement was made as to the financial details of the transaction.

2004/2005 result will be significantly better

In the current fiscal year, Heidelberg is aiming for a total increase in sales of at least five percent over the previous year on a comparable basis. The result is expected to show a marked improvement over 2003/2004. The Company’s goal is to achieve an operating return on sales of between four and five percent for the current fiscal year without the Digital and Web Systems divisions. However, the current fiscal year will be burdened by the costs of drupa and the cost of introducing numerous new products onto the market. All in all, the Management Board is projecting net profit in at least the mid-double-digit million euro range.

Free float of Heidelberg increased from 22 to 57 percent

Due to the placement of RWE AG’s 50.02 percent share in Heidelberg with international institutional investors at the start of May, the free float of Heidelberg increased to around 57 percent. The exchangeable bond in Heidelberg shares will raise the free float to 72 percent by 2007 at the latest. Until then, RWE will hold a 15 percent share of Heidelberg. Further major shareholders, who remain unchanged are Allianz (12 percent), Commerzbank (10 percent) and Munich Re (6 percent).

Modified reporting in the 2004/2005 fiscal year Starting from the first quarter of the current fiscal year, Heidelberg will report on the newly defined divisions Press, Postpress and Financial Services