Heidelberg remains bullish that it will achieve targets set for revenue and profit for this financial year, despite exchange rate headwinds, a drop in sales in the first half-year and a reduced operating cashflow.
The company can point to an expanding order backlog and the early repayment of a high yield loan, which cost it €4 million in one off costs, to indicate that it is on the right track. Furthermore it has signed up 20 subscription customers from around the regions. North America and Eastern Europe to join Western Europe with two signed in the Asia-Pacific area.
But investors are not yet fully convinced. The Heidelberg share price remains depressed. performing below the DAX and ending the first six months 24% than at the start. The uncertainties in international markets, caused by escalating trade wars, political uncertainty in South America and Brexit, are not helpful. Nor is a higher than expected wage agreement, described in the interim report as “a burden”.
CEO Rainer Hundsdörfer has his eyes set on the medium term rather than the immediate future. The company continues to seek an additional €500 million of sales and a margin growing to 10% over the next few years. It is a strategy for growth, he reiterates.
But savings are equally important. Restructuring costs in the first half were higher than the first half of last year at €5 million. And Heidelberg continues to look for opportunities to trim costs further. In a presentation to analysts, the company said that “products at a later stage in their lifecycle will be relocated to more cost effective locations along with the necessary infrastructure and manufacturing”.
It has operations in China, eastern Europe and once the acquisition of MBO is approved, a factory in Portugal, which might fulfil the lower cost of manufacturing for the more mature products.
Further acquisitions are not ruled out, while there is ongoing investment in software and the Heidelberg Digital Unit, designed to lead the way to a full digital transformation of the way that the company conducts business, beyond online ordering of consumables and tracing performance of presses.
A partnership deal signed in China recently will lead to a Heidelberg application for the online specification of cartons and boxes in that country at least.
The company has shipped seven Primefire B1 inkjet presses with the first the highlight of an international open house focused on packaging this month.
Heidelberg picked up incoming orders of €1.31 billion (€1.23 billion) in the first six months, a rise of 6%, with sales also increasing 6% to €1.11billion (€1.05 billion) and an operating result improving to €62 million (€60 million), resulting in a post tax loss of €6 million compared to a balanced result in the same period 12 months ago.
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