Annual General Meeting 2008 - Speech Bernhard Schreier |
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| 07/18/2008 |
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Not to be published until the speech begins!
Speech for the Annual General Meeting of Heidelberger Druckmaschinen AG
Friday, July 18, 2008 Congress Center Rosengarten, Mannheim
Bernhard Schreier
Chief Executive Officer
The spoken word applies!
Chart: Title
Chart: Welcome
Part 1:
Shareholders,
Shareholders' representatives,
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 year.
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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