Heidelberg will use a €320 million facility to fund acquisitions rather than reduce its interest burden, Heidelberg CEO Rainer Hundsdörfer has told financial analysts on the publication of the company’s annual report, though it subsequently reshaped its financial commitments to ease short term repayments.
“The financial focus is on growth, not restructuring,” he says. And the company already has its eyes on acquisitions in software and what it calls the wider ‘industry’.
The actual report and accounts publication celebrates printed labels, created either on Gallus combination and digital presses or on flat sheet litho machines. Labels, the company points out, are one of the fastest growing sectors of print, expanding at 5% a year with only a similar percentage produced on digital presses.
The Labelfire 340 is the Heidelberg response to this, and the company is shipping label presses at the rate of one a month, either the Labelfire or the B1 Primefire. The company is fully booked for the next two years with regard to digital packaging presses it says.
Despite this, the greater impact will come from the subscription model that was launched at the end of last year. The company has signed 17 deals to date, is looking to have 30 in place by the end of this financial year in March 2019. Thereafter it will sign 100 a year, says Hundsdörfer.
The package of press, consumables and services will be worth an additional 70% over the value of a press alone the company says. Likewise the revenue from the ink passing through the printhead is described as digital gold. “However, the digital harvest will not be realised until later years,” it says. Each Primefire running double shifts will consume 10,000-15,000 litres of ink a year, something that Hundsdörfer says is a conservative estimate. “It requires the customer to be selling the capacity and that takes some time,” he says. “In year four or five, perhaps even in year three, consumption of the ink will be bigger than turnover on machinery itself.”
To help reap this, there has been a further realignment of the corporate structure. There are now two divisions, Heidelberg Digital Technology which covers all presses and print processing equipment, and Heidelberg Lifecycle Solutions covering service and consumables, software and non print platforms.
This will include the Wallbox charging units for electric vehicles, realised under the Heidelberg name, and 3D printers that it is building for Berlin start up BigRep. This has been in production since November last year.
Despite the growth plans cost savings continue. A tier of management will be removed in the coming year: the division remarketing litho presses has already been wound down, resulting in a €34 million drop in sales for the year. A further €62 million drop is accounted for by exchange rates, leaving the company reporting sales of €2.42 billion (€2.52 billion). Pretax products increased to 39.1 million (€34.2 million). The company remains on course to achieve €3 billion in sales by 2022..
North America felt the greatest impact of the exchange rate, recording an 11% fall in sales. Sales were also down in Eastern Europe and South America. The Brexit effect is blamed for a fall in UK sales, though incoming orders at the end of the financial year, were stable. France and Italy are highlighted for strong years while China increased sales 10%.
The company is aiming at a better price level and product mix for the HDT division to lift margins from 2-3% to 8% in the mid term. Margins in the Lifecycle division are already 12-13%. The acquisition of Fujifilm’s pressroom chemicals division has added €25 million to consumable sales.
This has given it a 10% market share in Europe, and helping towards achieving the €3 billion target that Hundsdörfer has set as Heidelberg’s target. “It is over a year and a half since I joined Heidelberg. I saw that more of the same was not going to do it. I have the opportunity to build a true digital company, the first in the machinery industry, at least of this magnitude. Nobody else is capable of doing this; nobody else has the data, the brand name and the trust and also the organisation, the consumables and the logistics.”
Gareth Ward
Heidelberg CEO Rainer Hundsdörfer is having an impact on the printing press business 18 months after taking over the reins of the business. Looking back he says that business as usual was not an option.
