Annual General Meeting 2008 - Speech Bernhard Schreier
Not to be published until the speech begins!
Speech for the Annual General Meeting of Heidelberger
Friday, July 18, 2008 Congress Center Rosengarten, Mannheim
Chief Executive Officer
The spoken word applies!
Representatives of the media,
Ladies and Gentlemen,
On behalf of the Management Board of Heidelberger
Druckmaschinen AG, I would like to welcome you all to our Annual
General Meeting here in Mannheim.
The 2007/2008 financial year is now behind us - and it is
with mixed feelings that we look back at these 12 months. It was a
year with considerable ups and downs. We have undoubtedly seen a
lot of positive developments during this time - including our very
large format presses going into series production and setting
another milestone in our company's history. From our
shareholders' perspective, we have unfortunately been unable to
meet our forecasts for the financial year and our share price has
seen a significant drop.
As a result, we have suffered a substantial loss of trust,
first and foremost from you, our investors, but also from market
analysts. And we have also had to suffer some harsh criticism as a
consequence. We have listened to this criticism, Ladies and
Gentlemen, and have learnt from it. Our goal now is to restore the
trust that we have lost. We aim to do this by systematically
implementing our strategy and our program of measures to cut costs.
During the course of my speech, I will be discussing in detail our
long-term strategy and the short- and medium-term measures we will
be adopting to reduce costs.
But let us first take a look back at the 2007/2008 financial
A look back at financial year 2007/2008
The economic framework
The printing press industry has found itself in a very
difficult economic climate over recent months and this has also had
an impact on Heidelberg. Developments in the printing press sector
have been weighed down by fears of recession in the U.S., rising
inflation in Europe, the approaching end of the economic upturn in
Germany, the weak dollar and an equally weak Japanese yen, and
by increasing prices for energy and raw materials. All this has had
an impact on the economic climate in general and on the printing
press sector in particular. And, of course, it is also having
repercussions for Heidelberg, the clear number one in the industry.
During the second half of the financial year in particular,
prospects on numerous key markets weakened considerably. In a
number of regions, this led to significant reticence on the part of
our customers to press ahead with their investment decisions. This
resulted in a drop in incoming orders and sales, increasing price
pressures and lower margins. The highly competitive market meant
that we were unable to pass on the increased energy and raw
material costs or the consequences of the exchange-rate movements
to our customers to any appreciable degree.
Chart: Sales/incoming orders
Ladies and Gentlemen, Heidelberg's cutting-edge
technologies, products and quality have long made it the
world's leading manufacturer of sheetfed offset solutions. This
is a sector that is heavily dependent on the general economic
situation and in particular on the advertising industry and has
experienced many ups and downs in the past.
We had originally forecast "moderate growth" for
the 2007/2008 financial year. However, we failed to meet this
target, with sales down by around 3.5 percent to 3.67 billion Euro.
The first few months of the year were promising. However, the
economic climate worsened from quarter to quarter and this in turn
increasingly impacted on our business development. In the final
three months of the year, traditionally the quarter when we record
our strongest sales, revenue was almost ten percent below the
equivalent period of the previous year.
One of the key contributory factors was the unexpectedly
strong deterioration in the underlying economic conditions on our
second largest market, the United States. The fear of an
increasingly probable recession had a truly paralyzing effect on
our U.S. customers' willingness to invest. The worsening mood
at the start of the year was further depressed by the financial and
real estate crisis that was gripping the country.
The situation was further aggravated by the worsening
exchange rates between the euro and the dollar and yen. This merely
added to the significant competitive advantages enjoyed by our
Japanese rivals. Japan, of course, like Germany, is home to some of
our strongest competitors. Nevertheless we still succeeded in
holding our own against them.
The difficult underlying economic conditions affected sales,
but had an even greater impact on the level of incoming orders.
These fell by more than five percent, or almost exactly 200 million
Euro, to around 3.65 billion Euro.
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