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Heidelberg Reports Global Economy Weighed Down Fiscal Year Sales

May 2009
HEIDELBERG, GERMANY—05/05/2009—As a result of the global financial and economic crisis and the dramatic collapse in order levels in the mechanical engineering sector, the financial year 2008/2009 (April 1, 2008 to March 31, 2009) proved extremely difficult for Heidelberger Druckmaschinen AG (Heidelberg).

Despite high demand at the drupa trade show in spring 2008, preliminary incoming orders in the past financial year amounted to 2.906 billion Euro, 20 percent down on last year’s figure (3.649 billion Euro). Therefore, preliminary sales by the Heidelberg Group for the year as a whole totaled 2.999 billion Euro, 18 percent down on the previous year's figure of 3.670 billion Euro.  Accordingly, Heidelberg posted a preliminary operating result based on EBIT (including restructuring costs) of minus 228 million Euro (previous year: 268 million Euro). Excluding the restructuring costs, EBIT amounts to minus 49 million Euro. As expected, the preliminary annual result is also negative at minus 249 million Euro (previous year: 142 million Euro).
 
"We responded quickly to the difficult situation by introducing tougher cost-cutting measures. We are already seeing first signs of success. For example, we recorded a positive free cash flow in the fourth quarter and have significantly reduced our inventories in the last few months. As the market leader, we are able to maintain - and even extend - our considerable competitive advantages in this time of crisis, which promises good prospects for growth when the economic climate brightens," says Bernhard Schreier, Heidelberg CEO.

Almost all 179 million Euro invested in the cost-cutting program were incurred during the financial year just closed. Heidelberg expects to realize savings of between 350 and 380 million Euro in the financial year 2009/2010.

The global economic downturn continued into the fourth quarter (January 1 to March 31, 2009), leading to a sharp drop in orders by 43 percent to 474 million Euro for the quarter compared to the same quarter last year (previous year: 825 million Euro). At 788 million Euro, sales were down 28 percent on the same quarter last year (previous year: 1.102 billion Euro). Incoming orders up to March 31, 2009 amounted to 649 million Euro (previous year: 874 million Euro).

Thanks to its timely restructuring measures, Heidelberg succeeded in achieving an almost break-even operating result (excluding special items) in the fourth quarter despite the falling sales. In addition, Heidelberg was also able to achieve a clearly positive free cash flow totaling 76 million Euro in this difficult economic environment and cut its net debt - which increased for the year as a whole - from 729 million Euro in the previous quarter to 657 million Euro in the fourth quarter. Compared to the previous quarter, inventories were reduced considerably by 177 million Euro to 1.034 billion Euro (inventories at December 31, 2008: 1.211 billion Euro).
 

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