Retrieving command levels and transformation taking effect

– EBITDA excluding restructuring result increases after nine months to 147 million euros (previous year: 117 million euros)

– Demand picks up in China and Europe; incoming orders in December 2020 go back to the previous year for the first time

– Free cash flow in the third quarter clearly positive at 42 million euros

– Transformation of the company with tangible successes

– Full-year 2020/21 profit target raised – EBITDA margin excluding restructuring expected to be around 7%

HEIDELBERG, Germany, February 10, 2021 /PRNewswire/ — With increasingly tangible successes in business transformation, as well as growing demand for China and, since the third trimester, EuropeHeidelberger Druckmaschinen AG (Heidelberg) is also raising its operating performance target for the full fiscal year 2020/21. Therefore, the company expects its EBITDA margin excluding restructuring result to reach around 7%, even if the coronavirus pandemic could lead to a drop in sales of around 450 to 500 million euros compared to the previous year. (previous year sales: €2,349 million) for the full year. Previously, Heidelberg had forecast an EBITDA margin that would be, at its lowest, equal to that of the previous year at 4.3%. It is also an encouraging sign for the coming months that print volumes at Heidelberg customers have almost reached the levels of the previous year, with the print volume in the packaging sector even exceeding the level of the previous year.

“The successful deployment of the transformation measures has enabled Heidelberg to achieve a clearly positive operating result, despite the enormous pressures caused by COVID-19. Regarding our finances and our balance sheet, we have done our homework. Signs of recovery are now emerging in the markets China and Europe which are important to us. This is why our EBITDA margin objective excluding the restructuring result has been raised to approximately 7%. The growing interest in our contract business and the strong demand for our electromobility charging stations are also reasons for optimism for the future,” says Rainer Hundsdörfer, CEO of Heidelberg, commenting on the developments.

Also in the third quarter, the numerous measures of the transformation program launched last March more than offset the negative effect on profits caused by a significant drop in sales due to COVID-19. Consequently, after nine months of the 2020/21 financial year (April 1 to December 31, 2020), the operating result, including the effects of the measures implemented, was higher than in the same period of the previous year. In addition, the period under review recorded a slightly positive net result after tax and a sharp reduction in net financial debt.

Strategic milestones secure Heidelberg’s future

During the year under review, Heidelberg achieved several milestones in its strategy to secure the company’s future in a sustainable way, including:

– Reorganization of the company’s pension plan in Germanywhich strengthened the result and shareholders’ equity with a profit of 73 million euros.

– Concentrate on its core activities and sell the Belgian subsidiary CERM and the Belgian production site for printing chemicals, which enabled a total capital gain of 19 million euros.

– The discontinuation of unprofitable product lines which previously had a negative effect on the result of approximately 50 million euros per year.

– Reimburse the bond loan early, which will strip the financial result of 12 million euros per year.

– Cut around 1,600 jobs worldwide by 2023 (of which just under 1,000 will be cut this fiscal year), a decision that has been agreed with employee representatives and is being implemented on a socially acceptable basis. Combined with sustainable additional savings on material and personnel costs, this reduction in headcount is expected to result in savings of more than €170 million for the 2022/23 financial year.

– Sale of real estate in Wiesloch-Walldorf and the Print Media Academy in Heidelberg for a total purchase price of over 60 million euros as part of a site and structure optimization strategy .

– Agreement for a production joint venture with the Chinese company Masterwork Group, which creates opportunities in Asia and offers much better profitability.

– Double the production capacity of Heidelberg Wallboxes – charging stations for electric cars – by April 2021.

The sale of the Gallus Group, which did not take place at the end January 2021 despite the existence of a valid purchase contract, darkens the positive picture. However, this does not entail any limitations as to the forecast results for the current financial year. CFO Marcus A. Wassenberg explains, “Overall, we have made much faster and more successful progress in transforming our business than previously announced. We have raised over €450 million in cash, reduced debt by around €260 million, moved away from loss-making and will sustainably reduce costs by over €170 million per year. We are therefore convinced of returning to attractive profitability in the medium term.”

Figures for the first nine months of the 2020/21 financial year – increasingly good order levels

Although the market environment is still difficult, Heidelberg still saw signs of recovery during the third quarter. While the Chinese market had already returned to near-crisis levels, activity began to normalize again in Europe, too. After nine months of 2020/21 (April 1, 2020 for December 31, 2020), Sales amounted to 1,289 million euros and were therefore still around 24% lower than the same period of the previous year (1,690 million euros). At 1,421 million euros, incoming orders were 25% lower than the previous year (1,900 million euros). However, the shortfall was lower in the third quarter, at just 12%, and by December incoming orders were back above the year-ago figure for the first time this fiscal year. the backlog increased by 55 million euros compared to the previous quarter to reach 682 million euros.

Compared year to year, EBITDA excluding restructuring result fell from 117 million euros to 147 million euros, despite the drop in sales. On the one hand, the cost situation was improved by short-time working (which continued to fall in the quarter under review) and the cost savings resulting from the transformation measures implemented, which amounted to around 60 million euros after three quarters. On the other hand, income of 73 million euros from the reorganization of employee pension plans in Germany as well as the sale of the Belgian subsidiary CERM (approximately 8 million euros) and the Belgian production site for printing chemicals (approximately 11 million euros) also had a positive impact. In the third quarter, the EBITDA excluding restructuring result was 50 million euros and the EBITDA margin excluding restructuring result was 10.4%. After nine months, EBIT excluding restructuring result amounted to 88 million euros and was therefore significantly higher than that of the previous year (46 million euros). Overall, the expenses related to the transformation measures led to a restructuring result of € –38 million (previous year: € –8 million). After taking into account slightly higher financial charges, Heidelberg realized a slight net profit after tax of € 3 million, after recording a loss of € –10 million the previous year.

Free cash flow in the third quarter clearly positive at 42 million euros

Due to the conversion of securities into cash and cash equivalents and inflows from the aforementioned portfolio measures and improvements in net working capital, free movement of capital was improved by 63 million euros during the period under review to reach –10 million euros. A positive figure of 42 million euros was achieved in the third quarter. Following the comprehensive debt relief measures, net financial debt is 127 million euros, which is 262 million euros less than the comparable figure of the previous year. In this context, leverage (the ratio of net financial debt to EBITDA excluding the restructuring result for the last four quarters) fell to just 1.0 (previous year: 1.9). Despite the slightly positive net profit after tax, the further significant reduction in the actuarial interest rates for the valuation of pension liabilities in Germany meant that the equity ratio under IFRS fell to 2.6%, which Heidelberg considers unsatisfactory. However, the parent company still has a strong equity ratio of around 26% in its financial statements prepared on the basis of German commercial law.

Forecasts raised for the profitability of the 2020/21 financial year as a whole

Given the recent noticeable improvement in the order situation in many regions, increased savings under the transformation program and revenue generated from asset management and accounting measures, Heidelberg is clearly raising its forecast of EBITDA margin excluding restructuring result for the full financial year 2020/21. Despite the anticipated decline in sales related to COVID 19 of around €450 million to €500 million compared to the previous year (€2,349 million), the Company now expects a significant improvement of the EBITDA margin excluding the restructuring result at around 7%. Previously, the company was aiming for an EBITDA margin excluding restructuring result at least at the same level as the previous year (4.3%). The outlook is adjusted despite the fact that the planned sale of the Gallus Group will not be carried out. For the financial year 2020/2021, Heidelberg continues to expect a significantly improved, but again negative, after-tax result compared to the previous year, and an increase in debt from a low level. .

The nine-month report 2020/21, images and further information on the company are available in the Investor Relations and Press Lounge of Heidelberger Druckmaschinen AG at www.heidelberg.com.

Heidelberg IR now on Twitter:

Link to Twitter IR channel: https://twitter.com/Heidelberg_IR
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Further information :
Heidelberger Druckmaschinen AG

Business communication
Thomas Fichtl
Telephone: +49 6222 82-67123
Fax: +49 6222 82-67129
Email: [email protected]

Investor Relations
Robin Karpp
Telephone: +49 6222 82-67120
Fax: +49 6222 82-99 67120
Email: [email protected]

Important note:

This press release contains forward-looking statements based on assumptions and estimates by the board of directors of Heidelberger Druckmaschinen Aktiengesellschaft. Even if the Management Board is of the opinion that these assumptions and estimates are realistic, the evolution and the actual future results may differ substantially from these forward-looking statements due to various factors, such as the evolution of the macro-economic situation , interest rate exchange rates, interest rates and the print media industry. Heidelberger Druckmaschinen Aktiengesellschaft makes no warranties and assumes no liability for any damages in the event that future development and projected results do not match the forward-looking statements contained in this press release.

SOURCE Heidelberger Druckmaschinen AG

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