Exclusive Update on Heidelberg’s Outlook from CEO Bernhard Schreier
September 2008
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With recent announcements from Heidelberg that include cost-cutting measures, mention of a possible hostile takeover attempt and the restructuring of its R&D activities, Printing Impressions conducted an exclusive interview with Bernhard Schreier, CEO of Heidelberger Druckmaschinen AG, for a status report on the manufacturer's near- and long-term outlook.
Printing Impressions: Success from Heidelberg's EUR 1.1 billion sales performance and launch of VLF presses at Drupa was somewhat tempered by the announced cost-cutting measures. Was Drupa a measuring stick in the company's decision-making progress?
Schreier: Drupa was a great show to position our various innovations and the overall Drupa results were satisfactory, so that Heidelberg recorded an impressive volume of orders in Düsseldorf that exceeded the expectations. Nevertheless, the economic outlook and the development of higher material and energy costs is not promising. Heidelberg will, therefore, continue to work on processes and measures to improve its cost and earnings structure. The company has also been putting a great deal of work into its medium- to long-term strategy. This has made it clear that, all in all, increasing costs call for a further significant adjustment to the existing cost structures.
Printing Impressions: What do you feel is the root of the market sluggishness mentioned in the Heidelberg cost-cutting plan? And to what degree do the U.S. economy, exchange rates and excess capacity factor in? What other variables, if any, are also at work?
Schreier: Indeed, currency issues are affecting Heidelberg's business significantly. Heidelberg is facing worsening exchange rates between the euro and the dollar and yen. This resulted in significant competitive advantages enjoyed by our Japanese rivals.
In addition, higher labor and energy costs are reducing the margins.
Printing Impressions: During your company's annual meeting, you alluded to the prospect of a hostile takeover attempt. Given antitrust laws that might preclude your competitors from making a bid, what interests do you feel would represent the biggest threat to such a campaign? Also, would you totally rule out a major competitor making a play for Heidelberg?
Schreier: You already mentioned the antitrust laws and their meaning for our industry. In principle Heidelberg won't comment on takeover rumors concerning the company.
The aim of the Heidelberg Management Board is to stay independent. All of our efforts are going into the direction of increasing the value for our customers, as well as for our shareholders.
Printing Impressions: Success from Heidelberg's EUR 1.1 billion sales performance and launch of VLF presses at Drupa was somewhat tempered by the announced cost-cutting measures. Was Drupa a measuring stick in the company's decision-making progress?
Schreier: Drupa was a great show to position our various innovations and the overall Drupa results were satisfactory, so that Heidelberg recorded an impressive volume of orders in Düsseldorf that exceeded the expectations. Nevertheless, the economic outlook and the development of higher material and energy costs is not promising. Heidelberg will, therefore, continue to work on processes and measures to improve its cost and earnings structure. The company has also been putting a great deal of work into its medium- to long-term strategy. This has made it clear that, all in all, increasing costs call for a further significant adjustment to the existing cost structures.
Printing Impressions: What do you feel is the root of the market sluggishness mentioned in the Heidelberg cost-cutting plan? And to what degree do the U.S. economy, exchange rates and excess capacity factor in? What other variables, if any, are also at work?
Schreier: Indeed, currency issues are affecting Heidelberg's business significantly. Heidelberg is facing worsening exchange rates between the euro and the dollar and yen. This resulted in significant competitive advantages enjoyed by our Japanese rivals.
In addition, higher labor and energy costs are reducing the margins.
Printing Impressions: During your company's annual meeting, you alluded to the prospect of a hostile takeover attempt. Given antitrust laws that might preclude your competitors from making a bid, what interests do you feel would represent the biggest threat to such a campaign? Also, would you totally rule out a major competitor making a play for Heidelberg?
Schreier: You already mentioned the antitrust laws and their meaning for our industry. In principle Heidelberg won't comment on takeover rumors concerning the company.
The aim of the Heidelberg Management Board is to stay independent. All of our efforts are going into the direction of increasing the value for our customers, as well as for our shareholders.
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