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Heidelberg Releases Q3 Results, Emphasizes Digital Transformation

Releasing results for the third quarter of its current fiscal year, Heidelberger Druckmaschinen AG states it is still on course to increase its annual profit as planned. During the third quarter (October 1 to December 31, 2016), the company’s operating result (EBITDA) and the net result after taxes improved further compared to the same quarter of the previous year.

After nine months, Heidelberg explains its current fiscal sales of €1.7 billion were slightly below the previous year’s levels of €1.8 billion, as it expected, also stating a large number of orders placed at drupa, with longer delivery times, will be supplied on schedule in the fourth quarter.

Over the same period, incoming orders at €1.99 billion were approximately 4.5 percent higher than the previous year’s value (€1.90 billion). At €739 million, the order backlog was around 26 percent up on the previous year’s figure (€586 million). As a result, Heidelberg explains it has a good platform for achieving the significant sales growth planned in the fourth quarter.

“The improvements in results in the third quarter show that Heidelberg is on the right course to achieve sustainable profitability,” said Rainer Hundsdörfer, CEO of Heidelberg. “We anticipate we will further increase our annual profit with a strong final quarter.”

Heidelberg, in releasing its Q3 results, stated it is realigning its organization to accelerate its digital transformation for high-growth customer segments in the years ahead. In future, Heidelberg explains there will be a division that will develop, manufacture and supply appropriate digital technologies and products for new business models. Another division, according to the company, will devise and market these models.

“Heidelberg goes digital. We are getting the company fit for the digital future,” said Hundsdörfer. “To do that, we will develop and roll out our own innovative business ideas. However, we will also be strengthening our position in this area through acquisitions.”

Heidelberg’s current third quarter EBITDA, excluding special items, improved to €49 million in the third quarter (previous year: €40 million). The total figure after nine months was €94 million (previous year: €119 million). At €-2 million, special items in the quarter under review equaled the figure for the same quarter of the previous year (€-2 million). The total figure after nine months was €-8 million (previous year: €-24 million). The financial result for the period under review matched the previous year’s level at €-42 million. Consequently, the net result after taxes in the quarter under review increased substantially to €18 million (previous year: €7 million). At €-10 million for the nine-month period, it was on a par with the corresponding period of the previous year (€-7 million).

Free cash flow in the third quarter was slightly negative at €-10 million, and overall, after nine months, it was also at €-10 million. Compared to the financial year-end on March 31, 2016, the equity of the Heidelberg Group dropped to €246 million as at December 31, 2016. This was primarily due, according to the company, to changes in the actuarial interest rates for pensions.

“We have the financial strength to actively shape our route into the digital world,” said Dirk Kaliebe, CFO. “The balanced financing framework also gives us the freedom to drive forward new business models through targeted acquisitions.”

Thanks to the solid incoming orders and the rise in the order backlog, Heidelberg states it remains focused on its targets for 2016/2017. Although planned acquisitions have not been implemented yet, the company is still striving for marginal sales growth in light of a strong final quarter of the year.

Despite the inputs for the accelerated expansion of the digital and the service business, it also expects to achieve an EBITDA margin before special items on par with the previous year’s level in the 2016/2017 financial year. At the same time, the financial result will improve further on account of declining interest expenses. Thus, Heidelberg is still aiming for a moderate year-on-year increase in its net result after taxes for the year as a whole.