Financial year 2009/10: Heidelberg presents figures for first six months – orders stabilize at low level

• Incoming orders of EUR 534 million in Q2 roughly on a par with previous quarter
• Sales in 2nd quarter total EUR 499 million
• Operating result in Q2 excluding special items EUR minus 65 million
• Positive free cash flow of EUR 11 million in Q2
• Figures for first six months down on last year as a result of weak market conditions
• Higher cost savings have marked impact in second half of financial year

Incoming orders in the first six months of the financial year 2009/10 (April 1 to September 30) at Heidelberger Druckmaschinen AG (Heidelberg) have stabilized at the current low level. In total, however, the figures for the first six months are down significantly on equivalent figures for the previous year. As print shops are still running well below capacity due to low advertising budgets, the company does not expect any marked increase in investments in the print media industry for the financial year as a whole.         
 
Incoming orders of EUR 534 million in the second quarter (July 1 to September 30) were roughly on a par with the previous quarter (EUR 550 million), having stabilized at a low level since October 2008. The significant fall in incoming orders to EUR 1.084 billion in the first half of the year was also influenced by the high order volumes stemming from last year's drupa show (previous year: EUR 1.872 billion).
 
"Developments within the individual regions differ considerably. Asia is showing signs of recovery, which are not sufficient to fully compensate for the downturns in the other regions," says Heidelberg CEO Bernhard Schreier. "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. We can only expect to see an improvement in production values and capacity utilization in the print industry when the economy as a whole shows signs of a  lasting recovery, which in turn will encourage a greater readiness to invest."

The order backlog of the Heidelberg Group remained constant in the second quarter of the current financial year at EUR 617 million (previous quarter: EUR 616 million). 

The low level of incoming orders led to a slight drop in sales in the second quarter over the first quarter, falling from EUR 514 million to EUR 499 million. In the first six months of the current financial year, sales amounted to a total of EUR 1.013 billion and were thus down around 31 percent on the previous year (EUR 1.461 billion).

The operating result excluding special items amounted to EUR minus 65 million in the second quarter (previous year excluding special items: EUR minus 10 million). As a result of low profit contributions due to weak sales, the cumulative figure for the operating result after two quarters was EUR minus 128 million (previous year: EUR minus 45 million). Further expenditure for special items amounting to EUR 11 million has been incurred up to September 30, 2009 (expenditure for special items in the previous year: EUR 40 million). The net result for the first six months was EUR minus 147 million (previous year: EUR minus 95 million). 

As a result of a further reduction in the working capital, a positive free cash flow of EUR 11 million was recorded in the second quarter. In the first six months as a whole, free cash flow was only slightly negative at EUR minus 18 million, up significantly on the previous year's level of EUR minus 273 million.  

"All our measures aimed at cutting costs by around EUR 400 million a year are currently in the process of being implemented. This is going some way to compensating the burden on results brought about by falling sales," explains Heidelberg CFO Dirk Kaliebe.
"The cost savings achieved so far and the positive effects in asset management have enabled us to achieve a positive free cash flow in the second quarter and reduce the net debt over the previous quarter."

As a result of the slight increase in volumes in comparison with the previous quarter and higher cost savings anticipated over the further course of financial year 2009/10, the company expects to keep the operating result fairly level in the second six months of the year. 

With the conclusion of negotiations on a reconciliation of interests and a redundancy plan at the start of October, the planned cutbacks at Heidelberg are progressing. On September 30, 2009, Heidelberg had a workforce of 18,201 worldwide, representing a reduction of around 2,400 employees since the end of March 2008. In total, the company plans to cut around 4,000 jobs worldwide by the end of financial year 2010/11.

The weak economic conditions worldwide have impacted on the company's business in all sectors. Sales and incoming orders in this area were therefore down on last year. However, incoming orders for the new large-format presses exceeded expectations. Looking at the individual regions, Asia/Pacific was the only region to improve in terms of incoming orders. At EUR 172 million, orders for the second quarter were up on the previous year's figure (EUR 147 million). By contrast, incoming orders in all other regions fell compared to the previous year.   

Outlook
As a result of the business developments in the first six months of the year and the current economic and market forecasts, Heidelberg does not expect the level of investment in the print media industry to rise in the current financial year. For the subsequent quarters in financial year 2009/10, the company expects no significant increase in incoming orders and sales over the previous quarters, which means that the figures will likely fall short of the original expectations. Consequently, for the financial year as a whole, Heidelberg sales will fall well short of the figure for financial year 2008/09. 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. All the cost-cutting measures planned at Heidelberg are currently in progress. Moreover, the agreements made to date mean that personnel costs can still be adapted flexibly as needs dictate.  


For further information:
Heidelberger Druckmaschinen AG
Investor Relations
Andreas Trösch
Tel: +49 (0)6221- 92 6020
Fax: +49 (0)6221- 92 5189
E-mail: Andreas.Troesch@Heidelberg.com



Heidelberger Druckmaschinen

A technology provider and partner in the print media industry

Heidelberger Druckmaschinen AG (Heidelberg) is with its sheetfed offset printing machines one of the leading solution providers for the print media industry. All over the world, the name Heidelberg is synonymous with state-of-the art technology, top quality, and closeness to the customer. The core business of this technology group covers the whole value-added and process chain for the 35 x 50 cm (13.78 x 19.69 in) to 121 x 162 cm (47.64 x 63.78 in) format classes in the sheetfed offset sector.

Heidelberg develops and produces precision printing presses, platesetters, postpress equipment, and software for integrating all the printshop processes. Environmental protection has an enduring importance in this regard. Solutions for the development, production, and utilization of presses help to conserve resources, reduce emissions, and cut wastage. The Heidelberg portfolio also provides general and consulting services ranging from spare parts and consumables to the sale of remarketed equipment, and training at the Print Media Academy.

Based in Heidelberg, Germany, with development and production sites in seven countries and around 250 sales offices across the globe, the company supports around 200,000 customers worldwide. All Heidelberg presses destined for the world market are manufactured at the Wiesloch-Walldorf site in line with strict quality standards. Standardized presses in all standard format classes and folding machines for the Chinese market are produced by Heidelberg in Qingpu near Shanghai.

Heidelberg presses worldwide produce high-quality print products such as business cards, brochures, posters, and folding cartons.

In financial year 2008/2009, Heidelberg recorded sales of EUR 2.999 billion. As at March 31, 2009, the Heidelberg Group had a workforce of 18,926 worldwide, including 707 trainees.


Important Note
This press release contains forward-looking statements based on assumptions and estimations by the Management Board of Heidelberger Druckmaschinen Aktiengesellschaft. Even though the Management Board is of the opinion that those assumptions and estimations are realistic, the actual future development and results may deviate substantially from these forward-looking statements due to various factors, such as changes in the macro-economic situation, in the exchange rates, in the interest rates and in the print media industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no warranty and does not assume liability for any damages in case the future development and the projected results do not correspond with the forward-looking statements contained in this press release.