Reporting financial results for the first half of its 2009/10 financial year, Heidelberg CEO Bernhard Schreier said incoming orders have stabilized "at the current low level" but that the company’s figures for the first six months are down significantly relative to the previous year.

"Incoming orders are bottoming out now, but we do not expect to see clear signs of improvement in the subsequent quarters of the current financial year,” said Schreier.

The German press manufacturer had incoming orders of €534 million in its second quarter (July 1 to September 30, 2009), which is slightly less than the previous quarter mark of €550 million. When considering the first six months, Heidelberg’s incoming orders of €1.08 billion fell by around 43 percent when compared to last year’s first six months, €1.87 billion.

Heidelberg’s weakened incoming orders were echoed in a second-quarter sales drop to €499 million, from €514 million in the first quarter of the company’s current financial year. In the first six months of the current financial year, sales declined by about 31 percent when compared to the previous year, moving from €1.461 billion to €1.013 billion.

According to Heidelberg’s financial statement, “As a result of low profit contributions due to weak sales, the cumulative figure for the operating result after two quarters was minus €128 million.” The previous year’s operating result was negative €45 million.

The company reported a positive free cash flow of just €11 million in the second quarter. In the first six months as a whole, free cash flow was negative €18 million, while the free cash flow for the first six month’s of the previous year was negative €273 million.

“Consequently, for the financial year as a whole, Heidelberg sales will fall well short of the figure for financial year 2008/09,” reads a company statement, forecasting the year-end for 2009/10. “As a result of the low sales volume, Heidelberg forecasts an operating result (excluding special items) of between EUR minus 110 million and EUR minus 150 million."

CIT Group Inc., which has been a significant lender to small- and mid-sized printing companies, today filed for bankruptcy protection with the United States Bankruptcy Court for the Southern District of New York. In the past, CIT has supported the financing of significant equipment purchases, such as million-dollar offset presses, as well as merger-and-acquisition activity within the printing industry.

The filing for bankruptcy protection comes despite CIT receiving a US$2.3-billion bailout package from the United States government in the past year. None of CIT’s operating subsidiaries, including CIT Bank, a Utah state bank, were included in the filings.

The company’s reorganization plan is expected to reduce total debt by approximately US$10 billion, with a primary goal to “significantly reduce [CIT’s] liquidity needs over the next three years.” At the time of the filing, CIT held approximately US$71 billion in assets and US$65 billion in liabilities.

La PresseAfter threatening to completely shut down La Presse at the beginning of September 2009, Guy Crevier, president and publisher of the Montreal-based newspaper, announced management has entered into an agreement in principle with its four FTQ-affiliated unions (advertising, preparation, internal printing and boiler room). Meanwhile, negotiations are continuing with the four CSN unions (editorial staff, clerical staff, computing and distribution).

Crevier set a December 1, 2009, date to reach new labour agreements or there would be no choice but to shut down both the online and printed versions of La Presse, which is recognized as North America’s largest French-language broadsheet newspaper. In an email to employees, Crevier wrote: “Under its current business model, it has no chance for survival… As of Dec. 1, La Presse will no longer be able to pursue its activities without significant changes to its costs. If there's no settlement by that date, the publication of La Presse will be suspended, on paper and on [the online edition] Cyberpresse. . .”

Based in Montreal, La Presse, which is printed through Transcontinental, serves a daily readership of 815,900. The newspaper is owned by Gesca, a subsidiary of Power Corporation of Canada – controlled by the Desmarais family.


Kodak saw its revenue drop 26 percent in the past quarter and took a loss of US$81 million, yet the company says it is seeing signs of growth.

“On a sequential basis, the positive trends are clear. Our sales are stabilizing and some businesses are showing real signs of growth in the fourth quarter. That, combined with operational improvements in several of our key product lines, increases our optimism for significant improvement in the fourth quarter, our largest quarter of the year,” said Antonio M. Perez, Chairman and Chief Executive Officer, Eastman Kodak Company. “We also continue to gain significant traction with our new consumer and commercial inkjet businesses, and the productivity improvements that we’ve implemented thus far are helping to drive improved cash performance.

Gross Profit was 20.3 percent of sales, a decline from 27.5 percent in the year-ago period. Kodak attributes the decline in margin to lower intellectual property licensing royalties and unfavorable foreign exchange rates. Kodak's Consumer Digital Imaging Group third-quarter sales were US$535 million, a 35 percent decline from the prior-year quarter. Its Graphic Communications Group third-quarter 2009 sales were US$674 million, an 18 percent decline from the third quarter of 2008.

Xerox Corp. today reported a 52-percent drop in its third-quarter profit, but at the same time its numbers slightly bettered the expectations of financial analysts on Wall Street. Xerox CEO Ursula Burns said, “Our third-quarter performance reflects our continued disciplined approach to managing cash and reducing costs. As a result, we exceeded our expectations for earnings and operating cash flow.”

The company generated US$123 million in third-quarter profit, ending September 30, which was down from US$258-million in the same quarter a year ago. Total revenue for Xerox’s Q3 fell 16 percent to US$3.68-billion, compared to US$4.37 billion a year ago. Naturally, the company pointed to poor economic conditions for its drop in profits.

“Just as we are closely managing costs, our customers are doing the same and we have not seen a meaningful shift towards increased spending on technology,” said Burns. “For many of our business clients – small to large – there remains a hesitancy to invest until more economic factors show signs of steady improvement.”

Burns pointed to positive Xerox numbers in its growing services business, which was recently propped up by the move to acquire Affiliated Computer Services: “We’re winning new business from clients who want to reduce their cost base through our industry-leading managed-print services.”

Apple Inc. yesterday once again claimed to have its “most profitable quarter ever” as the Cupertino-based company announced financial results for its fiscal 2009 fourth quarter, ended September 26, 2009, including revenue of US$9.87 billion and a net quarterly profit of US$1.67 billion. This financial news helped to increase the value of Apple shares by seven percent, on the same day.

While this quarterly increase represents a 47 percent profit jump, Apple, for its entire 2009-financial year, saw profit rise by 18 percent to US$5.7-billion, while revenue climbed 13 percent to US$36.5-billion. International sales accounted for 46 percent of the quarter’s revenue.

Apple sold 3.05-million Macintosh computers during the quarter, representing a 17 percent unit increase over the year-ago quarter. The company sold 10.2-million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter.

Apple sold 7.4-million iPhones in the quarter, representing seven percent unit growth over the year-ago quarter. According to its GAAP accounting structure, Apple recognizes revenue and cost-of-goods sold for iPhone and Apple TV over their estimated economic lives.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

Heidelberg has finalized its previously announced job cuts of 1,300 this week to its sites at Wiesloch/Walldorf, Amstetten, Brandenburg, Ludwigsburg, and Mönchengladbach. A further 200 employees have agreed to leave the company on a mutually acceptable basis, making a total of 1,500 job cuts at the German sites in financial year 2009/2010.

"Following constructive discussions, we have found a reasonable solution for everyone involved," stated Heidelberg CEO Bernhard Schreier. "These painful cuts are essential to counter the effects of the most serious crisis of our industry and create a stable position for the company's future," he added.

Heidelberg previously announced its intention to reduce its workforce by 5,000 by 2011. Following the discussions with its employees, the number has been revised to 4,000. The additional savings will be made by dispensing with collectively agreed payments and payments above the general pay scale, and by agreeing to flexible working time models to adapt personnel capacities to the order situation. The Management Board and executives are also foregoing remuneration to a comparable extent in order to help lower personnel costs. The agreed upon package of measures will result in these costs being cut by more than EUR 250 million during the current financial year, compared to the previous year.

By the end of the cuts in 2011, the company expects to save EUR 400 million. As of June 30, 2009, the Heidelberg Group employed 18,353 staff worldwide.

The board of Winnipeg-based media conglomerate, Canwest Global Communications Corp., placed its prime business units, including the National Post newspaper and Global Television, into the Companies’ Creditors Arrangement Act.

Announced today, the move quickly followed another announcement of Canwest entering into a recapitalization agreement with a key group of creditors, what the company calls an “Ad Hoc Committee,” representing eight percent of senior subordinated note-holders of Canwest Media Inc. “Because it has the support of the Ad Hoc Committee, we believe that we can use the stability offered by the CCAA to implement this plan in four to six months,” said Leonard Asper, Canwest President and CEO, adding, “all our operations will continue uninterrupted.”

The CCAA bankruptcy protection specifically involves Canwest, CMI, Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World) and The National Post Company. It does not include Alliance Atlantis, which the company purchased in association with Goldman Sachs in 2007 or Canwest Limited Partnership – the company’s Canadian publishing and associated online and mobile operations.

Canwest purchased 50-percent ownership in the National Post newspaper back in July 2000, as part of what was then the biggest media deal in Canadian history, involving the $3.2-billion acquisition of Hollinger International Inc.’s Canadian newspaper and Internet assets – controlled, at the time, by Conrad Black. The deal also involved 13 daily metropolitan newspapers, 126 community newspapers, and various Websites such as

Then in August 2001, Canwest purchased the remaining 50 percent stake in the National Post from Hollinger – for $1. In April 2009, Canwest wrote down the value of its newspaper assets by $1.2-billion. At the start of this October, National Post CEO Paul Godfrey was reported to be leading a management buyout of the daily newspapers owned by Canwest.

View Canwest timeline: From 1974 to 2009 by The Globe and Mail.

Eastman Kodak Company hopes to raise upwards of US$700 million in funds, including an estimated US$400-million commitment from Kohlberg Kravis Roberts & Co. L.P. (KKR) based on the planned purchase of Senior Secured Notes that are to fall due in 2017.
 If the transaction is completed, scheduled for around September 30, Kodak's board of directors will appoint two individuals designated by KKR to the board.

In addition, Kodak agreed to issue to KKR warrants to purchase up to 53-million shares of Kodak common stock, which means Kodak could ultimately vary the amount of Senior Secured Notes purchased by KRR. Under the terms of the agreement, KKR is required to hold the warrants and shares for a minimum of two years. 

"KKR has a long, successful record of working with, and investing in, companies with significant value-creation potential,” stated Antonio Perez, Kodak's Chairman and Chief Executive Officer, in a press release about the arrangement. “We look forward to working with the KKR team to accelerate the growth of our portfolio of high-margin annuity businesses."

Kodak also announced it will readjust the release of its upcoming third-quarter results, as it “estimates total segment losses from continuing operations before interest expense, other income (charges), net, and income taxes will be between US$50 million to US$60 million.”

As it continues to operate under bankruptcy protection in Canada and the U.S., papermaker AbitibiBowater released further details about its restructuring plans, which includes the indefinite suspension of production at three Canadian mills, while another three Canadian operations will see paper-machine shutdowns. Another AbitibiBowater U.S.-based mill also faces an indefinite paper-machine shutdown.

According to a report from The Canadian Press (CP) news agency, the Montreal-based company estimates the closures, set to begin October 31, 2009, will affect 1,500 Canadians jobs. CP quotes the Communications, Energy and Paperworkers Union, which operates within the mills, stating that these cuts represent "disasters of historical proportions for communities that have been a mainstay of the Canadian forest industry."

The shutdowns include operations at a digital printing paper plant in Beaupre, Quebec, as well as plants in Clermont (Quebec) Fort Frances (Ontario), and Brooklyn (Nova Scotia). At the start of September, the Montreal-based company announced the sale of approximately 121,000 hectares of private timberlands in Quebec for $53 million in cash.

La Presse
Guy Crevier, publisher of North America’s largest French-language broadsheet newspaper, La Presse, said that the 125-year-old newspaper would cease publishing in print and online if the union is unwilling to make concessions by December 1, 2009.

The Canadian Press obtained an email Crevier sent to employees in which he described the challenges facing La Presse, writing, “Under its current business model, it has no chance for survival… As of Dec. 1, La Presse will no longer be able to pursue its activities without significant changes to its costs. If there's no settlement by that date, the publication of La Presse will be suspended, on paper and on [the online edition] Cyberpresse. . .”

The situation is emphasized by Crevier’s offer to let union representatives see financial statements concerning the newspaper in hopes of reaching a workable contract to continue publishing into 2010. Executives also plan to eliminate around 100 jobs from the operation’s current staff of 700. At the end of June, La Presse stopped publishing its Sunday edition. The newspaper is printed by Transcontinental Inc.

The December 1 ultimatum comes as La Presse is celebrating its 125th year of operation. The newspaper is the prime print asset of Gesca Ltee, which is a wholly owned division of Power Corp. of Canada, controlled by the Desmarais family.

PaperlinX has published its 2009 results (financial year ended June 30) which includes a AUD$798.2 million loss (about CAD$742 million). The company had a profit of AUD$72.2 million in 2008.

Commenting on the result, PaperlinX CEO Tom Park said, “This has been an extremely difficult year, with paper demand in all markets severely depressed by the global recession.”

The report states that in the second half of its financial year, global paper demand shrunk upwards of 20 percent. Through the sale of Australian Paper and European properties, the company managed to reduce its debt load from over AUD$1-billion at the end of 2008 to $217 million.

The company net earnings from paper merchanting, before interest and taxes, was $82.3 million, down 56 percent from the prior year. Its North American and European trading fared even worse, falling 76 percent and 69 percent respectively. In Australia, New Zealand and Asia, the company posted gains of 23 percent.

As at 30 June 2009, PaperlinX had 7,199 employees, down 23.1 percent from 2008.

With a 42 percent drop in the shipment of commerical printing hardware, HP's Imaging and Printing Group (IPG) saw revenues decline by 20 percent in the third quarter (ending 31 July) to US$5.7 billion. Operating profit for IPG, however, remained stable at US$960 million when compared to a profit of US$1 billion in the same quarter last year.

HP's total revenues for the third quarter of this year came in at US$27.5 billion, which is a two percent drop from the year earlier. “HP’s performance this quarter is a result of our strong business portfolio, efficient cost structure and scale,” said Mark Hurd, HP CEO. “Business is stabilizing, and we are confident that HP will be an early beneficiary of an economic turnaround and will continue to outperform when conditions improve.”

In Europe, the Middle East and Africa, revenue dropped 12 percent to US$9.9 billion, while it increased by eight percent in the Americas region to US$12.6 billion. Revenue from outside of the United States in the third quarter accounted for 62 percent of total revenues, with revenues in the BRIC countries (Brazil, Russia, India and China) declining six percent over the prior-year period, while accounting for 10 percent of total HP revenues.

Pointing to the completion of its EDS acquisition, HP noted record record profit in its Services division (US$1.3 billion), while revenue in this division increased 93 percent to US$8.5 billion. “Record profit in Services, double-digit revenue growth in China, and solid cash flow demonstrate HP’s ability to execute,” said Cathie Lesjak, HP CFO. The company saw an revenue decrease of 22 percent in its software sales, while the 20 percent decline in IPG was emphasized by a 13 percent drop in supplies revenue.

After announcing it would absorb a €347 million impairment charge in Q3, Finland-based Stora Enso Oyj then outlined plans to lay off up to 1,100 workers as it cuts production and closes mills, domestically. The paper giant currently has 29,000 employees.

“In the past two years, we have transformed the group to improve our long-term 
financial returns, which are the basis for the future of any company. We have 
tried to move as fast as possible, but it has not been fast enough,” said Stora Enso CEO Jouko Karvinen. “The operating environment has deteriorated faster than ever 
before: long-term structural cost inflation in fibre and energy costs has 
recently been followed by dramatic weakening in demand. As we cannot change this 
operating environment, we will instead continue to change Stora Enso so we can 
operate in the new environment.”

Units Stora Enso plans to permanently close down by mid-2010:
• Sunila Pulp Mill: annual production capacity 375,000 tonnes of softwood pulp, with 
around 250 employees;

• Imatra Mills PM 8: annual production capacity 210,000 tonnes of uncoated fine 
paper, with around 140 employees;

• Tolkkinen Sawmill: annual production capacity 260,000 m3 of sawn wood, with 
approximately 55 employees.

Units Stora Enso is provisionally planning to permanently close down by the end of 

• Varkaus mills: annual production capacity 290,000 tonnes of newsprint and 
directory papers, 310 000 tonnes of uncoated fine paper, 270 000 m3 of sawn 
wood; approximately 630 employees.

Units Stora Enso divests in early 2010:

• Kotka mills: annual production capacity 185,000 tonnes of machine-finished 
coated paper (MFC) paper, 175 000 tonnes of laminating paper and Imprex core 
stock, 250 000 m3 of sawn wood; approximately 530 employees.

Heidelberg, after announcing its new source of financing, published its financials for the first quarter of its financial year, which spans between April 1 to June 30.

While the company made a modest gain in incoming orders over the previous quarter (€550 million compared to €474 million), the numbers are more than 50 percent down from the same quarter in 2008, (which had sales of €1.151 billion).

"Our package of cost-cutting measures is proceeding according to plan," said Heidelberg CFO Dirk Kaliebe. "In the first three months of the financial year, we achieved a further reduction in personnel costs compared to the previous year, cut inventory levels, lowered research and development expenditure, and cut back significantly on investments. These savings contribute to compensating the impact falling sales are having on the result," he added.
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