Heidelberg unlikely to reach break-even target

Despite the German press manufacturer’s good operating growth, heightened economic uncertainties will dampen orders and sales in the second half of the 2011/12 financial year.

The operating result will not reach the level Heidelberg has been aiming for, and the company’s target of a break-even pre-tax result is unlikely to be achieved.

According to chief executive, Bernhard Schreier Heidelberg will persevere with its medium-term profitability targets. “Even if the planned increase in sales to over EUR 3 billion takes longer to achieve. We will take all the measures needed to achieve these objectives,” he says.

Preliminary second quarter results for the 2011/12 financial year report incoming orders improved from €650 to €668 year-on-year. This increase resulted in a €3 million rise in sales over the previous year’s level of €633 million.

In a bid to increase operating profitability beyond this quarters €5 million, the company has cut costs without making anyone redundant.

Dirk Kaliebe, CFO at Heidelberg, says business development in the past quarter has been in line with expectations. "We achieved a positive operating result in the second quarter. Thanks to consistent asset management, free cash flow exceeded expectations."

According to the VDMA (German Engineering Federation) incoming orders have fallen right across the printing and paper technology sector, with a 10% fall in the June to August period year-on-year.

The press manufacturer’s international orders have been buoyed by positive development in China and South America, yet dampened by ongoing economic uncertainties in the US, Japan and the Mediterranean countries.

Heidelberg’s complete second quarter financial figures are due 8 November.