Heidelberg reaches important strategic milestones - forecast for year as a whole confirmed

Heidelberg (ots) -

- Order backlog of EUR804 million in Q3 indicates strong final
quarter
- Nine-month sales of EUR1,693 million approximately 2 percent up on
previous year
- Solid operating result (EBITDA) of EUR101 million - net result
after taxes improves
- Targets for financial year 2018/2019 as a whole still in sight

Throughout financial year 2018/2019, Heidelberger Druckmaschinen
AG (Heidelberg) is consistently pursuing its strategy of using
digitization and collaborations to establish business models that
deliver sustainable profitability. This includes, on the one hand,
the move announced January 23, 2019 to reinforce activities in the
growth market of packaging printing by expanding the partnership with
China-based Masterwork. The intension is to expand the strong market
position in this segment, better address the potential in China and
Asia, and achieve efficiency improvements by further extending
cooperation in production. On the other hand, Heidelberg has also
reached key milestones in the roll-out of its "Heidelberg goes
digital" strategy. Following the signing of 26 contracts for the new
subscription model in the first nine months, the next interim target,
as previously announced, is 30 contracts by the end of the financial
year. This corresponds to an order volume of approximately EUR150
million.

Further progress in implementing the digital strategy

In addition, series production of the Primefire digital press is
continuing and the Heidelberg Digital Unit has been created to handle
the significant expansion in e-commerce sales. Future growth will
also be driven by the sector's largest and most advanced innovation
center, which was opened in Wiesloch in December. Heidelberg is
furthermore able to make ever greater use of its skills outside the
printing sector, such as in electromobility. For example, the 1000th
Heidelberg Wallbox - a new charging system for electric cars - has
already been delivered. In the medium to long term, Heidelberg aims
to generate approximately EUR50 million in sales with this product
and others like it.

"We have reached important strategic milestones in financial year
2018/2019. The enhanced partnership with Masterwork opens up a great
deal of potential for us in the growing packaging sector and on the
huge Chinese market," comments Heidelberg CEO Rainer Hundsdörfer.
"There is strong demand for the subscription model, our digital
presses have now entered series production, and we are leveraging our
skills for e-mobility. This progress makes us very optimistic about
the future development of Heidelberg."

Solid operational development in the first nine months

During the period under review (April 1 to December 31, 2018),
sales at Heidelberg increased by approximately 2 percent to EUR1,693
million (previous year: EUR1,657 million). Sales in the third quarter
were lower than the previous year's figures, largely due to
deliveries being moved into the fourth quarter owing to supply
bottlenecks at suppliers for certain product series, and due to the
discontinuation of a funding program in Italy. At EUR101 million,
EBITDA excluding the restructuring result did not quite reach the
previous year's figure of EUR105 million as a result of higher
collectively agreed rates of pay. This also saw the EBITDA margin
drop slightly to 6.0 percent. EBIT excluding the restructuring result
totaled EUR49 million (previous year: EUR54 million). As anticipated,
expenditure on restructuring measures aimed at improving efficiency
rose from EUR1 million to EUR9 million. The non-recurring transaction
and early redemption charges associated with the partial redemption
of the current high-yield bond amounting to EUR55 million meant that
the financial result rose from EUR-36 million to EUR-39 million after
three quarters. As the same quarter of the previous year involved a
non-recurring charge on income tax expenses of EUR25 million, the net
result after taxes in the period under review improved significantly
from EUR-10 million to EUR-2 million.

Operating cash flow was EUR50 million (previous year: EUR69
million). As in the preceding quarters, free cash flow was influenced
by factors such as an increase in inventories (caused by the growing
order backlog and longer-than-planned throughput times due to supply
bottlenecks), the start-up of digital operations, and investments in
the now-completed construction of the innovation center at the
Wiesloch-Walldorf site. Accordingly, a value of EUR-120 million was
recorded (previous year: EUR-20 million). At EUR361 million,
shareholder's equity was EUR16 million up on the equivalent period of
the previous year and the equity ratio climbed accordingly from 15.3
to 16.0 percent. Due to the negative free cash flow, the net
financial debt at the end of the quarter was EUR350 million (previous
year: EUR244 million). Leverage, as measured on December 31, 2018,
increased to 2.1, although this is set to drop back below the target
value of 2 by the end of the financial year, in part due to the
anticipated inflow of approximately EUR70 million from a capital
increase that is still to take place when the new anchor shareholder
joins.

"During the current financial year, we are stabilizing our
consolidated balance sheet for the long term. Our balance sheet
quality will be further improved, not just by the partial redemption
of our high-yield bond, but more importantly by the capital measure
associated with the entry of our anchor shareholder Masterwork, which
is anticipated to take place in the final quarter," said CFO Dirk
Kaliebe.

Targets for financial year as a whole still in sight - moderate
growth expected in net sales and net result after taxes

In view of the high order backlog and the fact that the orders
moved from the end of the third quarter were fulfilled in the first
weeks of the final quarter, Heidelberg expects another strong fourth
quarter. On that basis, the targets for the financial year 2018/2019
as a whole, which reflect a moderate growth in sales, can be
confirmed. The EBITDA margin excluding the restructuring result is
also expected to fall within a range of 7 to 7.5 percent, even
despite higher collectively agreed wages. Taking into account
previously announced restructuring costs in the order of around EUR20
million, non-recurring expenses from the partial redemption of the
corporate bond, and rising tax costs at foreign subsidiaries, the
forecast is for a moderate increase in the net result after taxes
compared with the previous year (including non-recurring tax items in
financial year 2017/2018).

Image material, the interim report for the first nine months of
financial year 2018/2019, and additional information about the
company are available in the Press Lounge of Heidelberger
Druckmaschinen AG at www.heidelberg.com.

Heidelberg IR now on Twitter:

Link to the IR Twitter channel: https://twitter.com/Heidelberg_IR
On Twitter under the name: @Heidelberg_IR

Other dates:

Publication of the preliminary figures for financial year
2018/2019 is scheduled for early May 2019 and publication of the
audited financial statement for financial year 2018/2019 and the
year-end press and analysts' conferences are planned for June 6,
2019.

Important note:

This press release contains forward-looking statements based on
assumptions and estimations by the Management Board of Heidelberger
Druckmaschinen Aktiengesellschaft. Even though the Management Board
is of the opinion that those assumptions and estimations are
realistic, the actual future development and results may deviate
substantially from these forward-looking statements due to various
factors, such as changes in the macro-economic situation, in the
exchange rates, in the interest rates, and in the print media
industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no
warranty and does not assume liability for any damages in case the
future development and the projected results do not correspond with
the forward-looking statements contained in this press release.

Further information:

Corporate Communications
Thomas Fichtl
Phone: +49 6222 82-67123
Fax: +49 6222 82-67129
E-mail: Thomas.Fichtl@heidelberg.com

Investor Relations
Robin Karpp
Phone: +49 6222 82-67120
Fax: +49 6222 82-99 67120
E-mail: robin.karpp@heidelberg.com

Original-Content von: Heidelberger Druckmaschinen AG, übermittelt durch news aktuell