Heidelberg is celebrating a first quarter in which sales rose, orders fell but other significantly and it was able to announce a non print partnership. And investors reacted positively pushing the share price to €2.42 before falling back to €2.10 on Friday, still almost double their value a year ago.
Sales for the quarter increased to €466 million (€403 million) driven by very strong business in Italy where government support is underpinning modernisation and thus investment. While sales in the Americas regions fell 20% those to the US remained stable as Q1 last year.
The company says that the US accounts for 13% of its revenue, but that only 50% is from products imported from Germany, thus liable to tariffs, while 50% comes from locally incurred costs, such as support and installations. This limits the impact of the tariffs. Nevertheless US customers will be expected to cover the additional cost.
Heidelberg is not sitting back. It is looking for ways to mitigate the impact, pointing out that it has production in China so will be able to use this should tariff rates applying to the EU and to China differ.
Incoming orders, which were boosted last year by Drupa, did not enjoy the same effect from China Print. Consequently incoming orders fell from €701 million to €559 million. The company comments that incline orders from the Netherlands and Great Britain could not keep up with the particularly strong figures posted in the previous year.
The fall affected the print and packaging equipment division to a greater extent than to the digital solutions and lifecycle division.
The net effect was a leap in Ebitda to €20 million from a negative of €9 million in Q1 last year, but this was educed by carrying €10 million of costs associated with Drupa. The improvement in margin shows the effects of continual efforts to manage the cost base.
CEO Jurgen Otto says: “Thanks to our global market position and an improved cost basis, we have made a good start to the new financial year. Strategic measures in our core business, together with new options in the technology segment and our move into the defence sector, give us cause to feel very confident about the prospects for the year as a whole.”
This is the partnership with Vincorion, a provider of vehicles used in the defence and other critical sectors. Under the terms of a Memorandum of Understanding, Heidelberg will develop and build power control and distribution systems as militaries move away from reliance on fossil fuels.
