Heidelberg has overcome the worst crisis in its corporate history and preserved its strong position in a tough competitive environment. The Group has a new, highly efficient, and customer-driven organization, and its cost structures have been adapted to the changed market conditions. In the end, we implemented the right strategy during the crisis: competitive products and services, a strong presence in newly industrializing countries, dedication to less cyclical segments such as services and consumables, and the expansion of business with packaging print shops.
The print media industry is also recovering in the industrialized countries. We will make use of our strong market position to benefit to a greater extent than our competitors. The capital increase and the successful refinancing have served to enhance the Group’s financial stability. These measures are an important signal for the Group’s turnaround and also serve to improve our ability to respond to new situations.
The global production of printed products currently totals approximately € 411 billion, and this figure will increase further over the next few years – primarily due to rapid growth in the newly industrializing countries as well as stable growth rates in packaging printing. Over 40 percent of the printing volume is currently for print advertising, nearly 25 percent for packaging printing, and over 30 percent for the publishing sector. The following graph illustrates the technologies used to produce the printed products in the various market segments. Packaging printing will account for a higher share in the future, whereas the volume of publishing will decline.
In the industrializing countries, which are important for us, such as China and Brazil, during the crisis investments of the print media industry declined to a considerably lesser extent than in the industrial countries. Even in the time of crisis, the growth in gross domestic product hardly dropped below zero. After all, increasing urbanization in these regions is resulting in a greater need for packaging, higher demand for print advertising, and more information that is spread in printed form. In addition, the quality of printed products is increasing. We offer customers in the newly industrializing countries a strong portfolio of products and services, which support them in their expansion of business.
The Chinese market in particular is still growing strongly. Demand in that market is primarily for standard printing presses. We continue to be the only European supplier with local manufacturing facilities. We are now meeting some of the demand for standardized printing presses and folders in other Asian countries from China.
In recent years, we have focused especially on expanding those areas of business whose sales trend is less dependent on economic cycles than print advertising – in particular, on our product offerings in packaging printing, which is growing at a greater pace than print advertising, our product line of consumables, and the range of our service offerings. We have additionally considerably lowered the Group’s break-even point.
On the one hand, we will generate internal growth and also considerably expand our cooperation with financing partners in order to realize the projected medium-term expansion of the Heidelberg Services Division’s sales, which also include the consumables business. On the other hand, we will also focus on external growth opportunities through business acquisitions if this approach results in value added.
In the Heidelberg Equipment Division, in addition to research and development as well as purposeful investments, we also favor cooperation agreements in order to expand our offerings and further adapt them to customers’ requirements. We entered into a long-term strategic partnership with Japan’s Ricoh Group, a manufacturer of digital printing systems, during the financial year. In some European markets, we have been selling Ricoh printing presses since April 1, 2011, which ideally supplement our own product portfolio for very small or personalized print runs. By the time drupa 2012 is held, we will have extended these sales to all regions. Together with Ricoh, we are pursuing the goal of pointing print shops in the direction of new opportunities and paths for satisfying customer demand more simply, more productively, and more profitably. With this innovative approach, we provide our customers with permanent added value.
We can also make use of our employees’ expertise, our global sales network, and our manufacturing facilities above and beyond the print media industry. After just 1½ years following the launch of the Heidelberg System Manufacturing business area, we are supplying over 20 companies as customers in order-based production, primarily in the energy and engineering sectors.