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Heidelberg's Nine-Month Figures Show Cost-Cutting Measures Having a Positive Impact

February 3, 2009
HEIDELBERG, GERMANY—02/03/2009—Heidelberger Druckmaschinen AG (Heidelberg) is publishing its financial statements for the first nine months of financial year 2008/2009 (April 1 to December 31, 2008). Despite a weaker performance, the company achieved a break-even operating result in the third quarter for the first time in the current financial year thanks to the cost-cutting measures initiated. Heidelberg Group sales from October to December 2008 totaled 750 million Euro (previous year: 929 million Euro). In the same period, the operating result excluding special items achieved break-even (previous year: 81 million Euro). The unfavorable macro-economic climate and the crisis on the financial markets had an adverse effect on business as a whole and resulted in a further drop in incoming orders to 560 million Euro in the third quarter (previous year: 958 million Euro).
 
"The crisis on the financial markets hit the mechanical engineering sector hard at the end of 2008," said Heidelberg CEO Bernhard Schreier. "There has been a sharp drop in investments because our customers are expecting capacity requirements to fall and are feeling unsettled. One key factor in our favor is that we were quick to introduce stringent cost management measures. We have trimmed personnel costs with measures that include short-time working in all areas, scaled down production, streamlined administrative structures, and reduced our investments and the amount spent on research and development. These measures are having a positive impact despite the difficult situation at present. Heidelberg benefits from a solid footing and sound financing. We were also quick to respond to the current economic crisis with our package of measures," he added.
 
Heidelberg adopted a package of measures to cut costs as early as the middle of 2008. Both the package's scope and its speed of implementation were stepped up at the end of October 2008 in response to the economic situation. As a result, costs will be cut by between 150 and 180 million Euro already in the next financial year. Further measures in financial year 2010/2011 should generate total annual savings in the order of 200 million Euro.
 
The total amount spent on the cost-cutting program is between 110 and 130 million Euro and the majority of this can be expected to be posted in financial year 2008/2009. These costs are lower than the predicted figure of between 130 and 150 million Euro. This is due to the release of provisions for partial retirement put aside in September 2008.
 
In December 2008, Heidelberg sold all its shares in the Swedish mailroom supplier IDAB WAMAC. In addition, short-time work was introduced at the German sites at the end of the third quarter as an immediate measure to reduce capacity and this is to continue in the coming months.
 

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