Risk and Opportunity Report - Overall Risk Falls Substantially

• Greatest Risk: Print Media Industry's Upswing Could Be Delayed - and Sales Targets Missed
• Both Risks and Opportunities Greater in the Chinese Market 
• Exchange Rate Volatility and Changes in Exchange Rate Parities Could Burden Growth and Competitive Conditions
• Opportunity: Investment Backlog Could Be Worked through More Quickly than Expected

No risks that could threaten the existence of the Heidelberg Group are evident, either at the present time or in the foreseeable future. This applies to both the results of our already implemented economic activity as well as to operations that we plan or have already introduced.
In order to determine our overall risk, we focus on individual risks that belong together substantively. In doing to, we do not offset potential opportunities against risks. The graphic on the right shows the altogether gratifying development across-the-board of risk groups compared with the previous year. The overall risk situation of the Heidelberg Group again changed for the better after improving considerably already during the previous year. Nevertheless, various developments could endanger the further growth of the world economy. An unfavorable development of the overall economy represents the greatest risk for us, which we cannot cover in our planning process. At the present time, the economic situation of print shops is again favorable, not only in the newly industrializing countries,but in many industrialized countries as well. Moreover, we have considerably and sustainably reduced the Group's operating break-even point, and we continue to scale back the Group's dependence on cyclical fluctuations. A failure of the expected further recovery in the print media industry to occur, especially in the industrialized countries, would substantially weaken demand in the printing press segment. A higher share of sales of standard printing presses would cause the expected profit margins to shrink. In the case of a longer economic downswing, moreover, renewed excess capacities would result in greater price competition among printing press manufacturers should a reduction in these excess capacities in the short term not be feasible. In addition, sales of the Heidelberg Services Division could stagnate. As in the past, our relatively non-cyclical divisions could only partially compensate for an economic downswing in the industrialized countries.

As at: July 2011