Rebound year for Heidelberg in Australia and New Zealand

A good result at drupa and a renewed willingness by local printers to invest in presses is powering a revival in the fortunes of Heidelberg Australia and New Zealand (HAN). The largest supplier in the industry is predicting a return to profit this year on the back of improving sales figures and $74.6 million in forward orders.

According to Andy vels Jensen, managing director HAN, (pictured) sales orders and installations of press units by the company are expected to reach 450 units this year, a major turnaround on the 340 units in 2003. The result reverses a trend that has seen the numbers of press units installed by the local industry collapse from the high point of 520 units in 2001 and 480 in 2002.

“This is the biggest year in five years for us. Business is still tough and it is difficult to make money. But we are still the lucky country. Elsewhere the industry has dropped like lead over the past three years. Although margins are still under pressure in our region the erosion of the street price for presses seems to have bottomed out. This is good news not only for suppliers but for printers who have seen the value of their assets, the superannuation fund on the press floor, deteriorate in recent years. Although there are still good deals to be had, some stability appears to be returning to the market,” he said.

The erosion of the street price of press units along with the decline price of printing is a worldwide trend with Australia and New Zealand escaping the dramatic falls that have devastated the industry elsewhere. Even so the street prices of half-size presses here have dropped by 15%, larger units are down 9% and the A3 market fell by 12-14 %. While this has provided printers with cheaper new equipment, it is a double-edged sword, compounding a decrease is the asset value of existing presses. Any further drop in press prices is likely to see more printing companies move into critical asset/debt ratios.

“Australia is the lucky country compared with the collapse in Germany and the USA over the past three years where profit on printing has dropped by as much as 90%. Of ten leading printers in Germany only one was profitable during that time,” said vels Jensen. “Surprisingly New Zealand has proven to be one of the most stable markets in the world. Why? I’m not sure, perhaps because it is more export oriented, or because as a small country the industry is more aligned with the economy.”

He points out that New Zealand was in the forefront of the long perfecting revolution that has changed the face of the industry over the past five years. This is an area where HAN dominates the local market with over 90 % of the 50 long perfecters (450 printing units) installed.

The good result for HAN also translates into prepress with the company selling 160 Prosetter 52s platesetters so far this year. Finishing equipment has remained relatively unaffected by the changes over recent times.

Changing face of Heidelberg

The company that vels Jensen is predicting will return to profit this year (not counting a transfer pricing payment of $11 million), is vastly different to the one he inherited five years ago. In an era of cost reassessment he has closed the company’s high profile showrooms in Melbourne and cut in the number of employees, although he is quick to point out that HAN still has by far the largest service division in the region. He is now facing the remainder of the year without the profitable web press division, which represented 15% of the company’s turnover. The division’s five employees, led by industry veteran Jim Wand, will transfer to Goss this month. He also no longer has a digital division following NexPress’s departure to Kodak.

Instead he is focusing on the company’s core sheetfed market as the major growth sector and the continuing development of a three-year initiative to provide added value in key account management.

“It is a changing industry. Companies are getting bigger and requiring different services from us. We have five consultants who are able to provide an audit and benchmarking for companies, identify bottlenecks and suggest ways to improve and where they should be going in the future. It is important that we, and our customers, understand the total business,” he said.

Key account management looks at ways to improve such areas as production and labour costs, paper wastage and optimum time to write off equipment as well as provide strategic investment advice. So far over 30 of the company’s largest customers have availed themselves of the service, which is a key part of HAN’s future.

Other key products for HAN’s future prospects include the continuing rollout of the workflow system, Prinect. With the arrival in October of the MIS module Prinance, the company will have the only single-branded end-to-end workflow in the industry. As the integration of computer integrated manufacturing (CIM) continues in the printing industry, this is an area where the company’s sees it has a strong strategic advantage.

A renewed resistance to the impact of digital printing is also on the cards, now that the company has exited the sector. The promotion of fast-changeover small offset, such as the SM 52, combined with the polyester CTP on the Polysetter, as an economical alternative in the short run, print on demand market is likely to strike a chord with many Heidelberg customers.

Other areas of business development areas towards which the company is looking include the flexo industry, although this project is still under wraps.

Following a testing time, not only for the company, but also for the industry as a whole, there appears to be positive signs of a recovery. “There is some sense that the industry has bottomed out. And while the shake-out will continue, I think we can expect some improvement,” said vels Jensen.