Heidelberg is searching for a strategic partner to sit alongside Masterwork, the Chinese company that is now the major shareholder in the print equipment business. The new partner would “bring know-how and money”.
In an interview with the Rhein-Neckar Zeitung, CEO Rainer Hundsdörfer explained that the company was in the early stage of talks and described the ideal partner: “Someone with similar interests and complementary skills, for example in the field of digital printing.
“Ideally, that would be one of today’s digital press manufacturers who are all squinting at inkjet printing. Someone who has something that Heidelberg does not have: printheads and maybe ink.”
Heidelberg already works with Fujifilm in supply of printheads for its Primefire B1 sheetfed inkjet press and is also a major ink supplier. It also has a partnership with Ricoh which likewise has its own printheads and inks supply. Konica Minolta, Xerox and HP might also qualify.
The interview took place following the collapse of Heidelberg's share price. It was trading at €0.97, having fallen below the €1 mark. Its bond, redeemable in 2022, has also struggled and has been changing hands at 88% of value. This in turn followed two profit warnings and sales falling below expectations for two quarters in a row.
The company has already admitted that order intake in May and June was below par, but has also said that there has been a pick up in July. Headwinds created by economic uncertainty have not helped, Hundsdörfer has said. In order to cut costs, the company has instigated short term working and flexible working arrangements.
Hundsdörfer remains convinced that the transformation into a digital company is the correct course of action, albeit it may take longer than expected. The strategy has been to use revenue generated by sheetfed offset to invest in the new Heidelberg. He told the paper: “We are developing a new technology that binds many resources and about half our development budget. But if we do not do it, others will. Then we risk a great growth opportunity for Heidelberg's, because this technology will prevail, I’m absolutely sure.”
The Primefire has proved a tough sell, with eight machines installed since being launched as the star attraction at Drupa three years ago. More orders are in the offing, but profitability remains some way off, hence the need for cash from the sheetfed litho side.
Likewise the subscription model is slow to pick up. There were 30 contracts signed last year and a further 70 anticipated for this year. It is not something that will happen overnight, he says.
Other cost saving measures include the sale of non core activities, which might raise €30 million this year, the postponement of some investment programmes, action on labour costs, including early and phased retirement measures, and acting as landlord for businesses that want to relocate to Heidelberg's Wiesloch campus. Again it is not something that will happen overnight.
If the German factory is under utilised, the Shanghai plant is very busy. And Hundsdörfer is contemplating further changes to produce simpler machines in lower cost economies leaving Wiesloch to produce only what it can make profitably.
The immediate actions are designed to improve free cash flow. These he admitted are creating uncertainty in the workforce, but the direction of travel is the correct one. “Heidelberg is in no acute danger,” he added.
By Gareth Ward
Successive profit warnings while Heidelberg transforms its business have dented the share price, but this does not mean that Heidelberg is in acute danger says Rainer Hundsdörfer.