"How is the economic situation
of Heidelberg shaping up?”

Heidelberger Druckmaschinen AG is making rapid progress with the transformation initiated in November last year to increase profitability, competitiveness, and safeguard the future: following the financial stabilization through the retransfer of €380 million from the trust assets of Heidelberg Pension Trust e.V. in March significant structural measures are now being implemented. In June, a new operating model was launched which, with fewer management levels, leaner processes and a significantly improved customer focus, enables more efficient management of the profitable core business. Overall, the action package is designed to improve Heidelberg's profitability by € 100 million. Heidelberg also believes that the program will strengthen its position in the ongoing difficult market environment caused by the Covid-19 pandemic.

2019 was the year of clarity and consequences for us. Even before the Covid-19 crisis, we launched the most comprehensive restructuring program in our recent company history to strengthen Heidelberg's profitable core. Now we are doing everything in our power to further stabilize our financial base and become sustainably profitable in the medium term. We are pressing ahead with the implementation of this program in order to make Heidelberg a better company. We have already reached important milestones. Particularly in times of crisis, this also helps us to be a strong partner on our customers' side and to actively support them.

We have a solid financial base and staying power. Heidelberg’s stability throughout the crisis is a good springboard for potential economic recovery.
We are now streamlining and lowering the breakeven point. Positive outlook in Heidelberg’s markets instill optimism for future developments.
We are focusing on our profitable core business. As technology leader and full-service provider (product and service), Heidelberg is a trusted partner to customers in its core business.

Heidelberg’s strategy is clearly focused on boosting profitability, and consequently on the markets and market segments which are profitable and in which the company holds a leading global position. Incoming orders in the Asia/Pacific region thus increased in total to € 683 million despite Covid-19-related shortfalls in the fourth quarter (prior year: € 658 million). Much of this is due to orders from China, where Heidelberg already has a large presence to take advantage of growth opportunities with an 850-strong workforce. As the world’s largest packaging printer supplier, Heidelberg is also ideally placed to tap into the potential of major growth markets such as China in that segment. By now, Heidelberg makes some 50 percent of its revenues from offset machines in this sector.

We have clearly set our focus on profitability. That is our strategic roadmap and the path we will consistently stick to going forward. This will put us in a position to benefit substantially when markets recover. This is matched by the positive development of free cash flow, which amounted to EUR 225 million (previous year: EUR -93 million), mainly due to the inflow of around EUR 324 million from trust assets. Heidelberg has thus significantly stabilized its finances in a difficult economic environment.

Financial stability

Significant reduction in net debt

During the financial year which has just ended, Heidelberg significantly reduced net debt to € 43 million with an approximately € 380 million retransfer to the company of trust assets from Heidelberg Pension-Trust e. V. at financial year-end, making the company more stable today than it has been for years. Also leverage – the ratio of net debt to EBITDA excluding restructuring result – was at a low of 0.4. This paves the way for the company to harness its own resources in securing its status as a reliable partner to its customers, even in the current historic global economic crisis.

  • Traditional intra-year increase in net debt due to inventory build-up and larger share of sales in second half-year.
  • Higher level of net debt overall in 2019/20 financial year due to initial application of IFRS 16 (€ 50 m approx.) and higher net working capital (NWC).
  • Nevertheless, significant reduction in net debt at reporting date to € 43 m (March 31, 2019: € 250 m) due to higher cash and cash equivalents.

Stable financing framework with sufficient liquidity

The pillars of our financing portfolio – capital market instruments (corporate bond and the remaining convertible bond units), the syndicated credit line plus other instruments and promotional loans – were well balanced at the reporting date with a total volume of around € 590 million. The exercise of the put option by bondholders reduced the outstanding volume of the convertible bond to around € 17 million as of March 30, 2020. The Company is planning to redeem the corporate bond in the course of the 2020/2021 financial year. However, the timing and the resolution on implementation depend on ongoing business development, with regard to the impact of the current global Covid-19 pandemic. The syndicated credit line, which is only partially drawn down, was reduced from around € 320 million to around € 267 million. Together with the cash in hand at the reporting date, it provides Heidelberg with financial flexibility for its forthcoming reorientation and the day-to-day operating activities of the global organization.

  • The pillars of our financing portfolio – capital market instruments (corporate bond issue and remaining portion of convertible bond issue), syndicated credit facility and other instruments and promotional loans – are well balanced at the reporting date with a total amount of some € 590 m.
  • The outstanding amount of the convertible bond was reduced to about € 17 m as of March 30, 2020 due to bondholders exercising the put option.
  • Corporate bond (HYB) to be repaid in course of 2020/2021 financial year, as previously planned.
  • The syndicated credit facility, which is only one-third drawn in cash, has been reduced from around € 320 m to € 267 m. Together with the cash and cash equivalents of around € 430 m at the reporting date, this gives Heidelberg financial flexibility for the forthcoming realignment and the day-to-day operating business across the global organization.

In the medium to long term, Heidelberg believes that the comprehensive package of measures will help to sustainably improve the company's future profitability and its financing power for future growth.

Presentation Annual General Meeting 2019/2020

Annual Report 2019/2020

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Our packaging strategy
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