Heidelberg reports 35 million Euro Loss for Q1
Wednesday, August 06, 2008
Press release from the issuing company(August 05, 2008) In the first quarter of financial year 2008/2009, Heidelberg Druckmaschinen AG (Heidelberg) recorded a significant improvement in incoming orders over the previous year thanks to the industry trade show drupa. In the period under review, the Heidelberg Group increased its incoming orders by around 23 percent over the same quarter the previous year to 1.151 billion Euro (previous year: 934 million Euro). As already announced on July 10, 2008, sales and earnings were significantly down on the equivalent figures for the previous year due to difficult market conditions and customers' reluctance to invest in the run-up to drupa. Sales by the Heidelberg Group in the first three months (April 1 to June 30) totaled 657 million Euro (previous year: 742 million Euro). The order backlog at the end of the first quarter was 1.298 billion Euro (previous quarter to March 31, 2008: 874 million Euro).
"Healthy incoming orders from drupa will mean better operating results in the second and third quarters than in the first three months," stated Bernhard Schreier, CEO of Heidelberger Druckmaschinen AG. "The trade show enabled us to underline our position as the world leader in the industry, but difficult underlying conditions are still impacting on the current market situation. The package of measures already introduced to improve our cost structure will compensate these effects in the medium term," he added.
The Heidelberg Group recorded an operating result of minus 35 million Euro in the period under review (previous year: 26 million Euro). The net result in the first quarter was minus 39 million Euro (previous year: eight million Euro).
Due to the purchase of Hi-Tech Coatings, the cost of drupa, and falling sales, the free cash flow in the first quarter was clearly below the previous year's level at minus 211 million Euro (previous year: minus 81 million Euro).
"As already indicated, weak sales and additional costs led to a negative operating result for the first quarter of the financial year," explained Heidelberg CFO Dirk Kaliebe. "We are working hard to ensure successful implementation of the package of cost-cutting measures introduced so that the resultant savings can be achieved as planned."
As of June 30, 2008, the Heidelberg Group had a workforce of 19,737 worldwide (previous quarter: 19,596). The reasons for the increase in the first quarter of financial year 2008/2009 were the acquisition of the Hi-Tech Coatings companies and the initial consolidation of the production site in Qingpu, China. Adjusted to take into account these initial consolidation effects, the workforce fell by 77 in the first quarter.
Results in the Press and Postpress divisions
A successful drupa resulted in healthy incoming orders in the Press Division (offset printing) in the first quarter of the year under review. At 1.030 billion Euro, they were 26 percent up on the previous year's level (previous year: 817 million Euro). Sales in the first three months totaled 568 million Euro (previous year: 639 million Euro). The poor performance of sales combined with additional costs, including those associated with drupa, led to an operating result of minus 29 million Euro (previous year: 21 million Euro).
Incoming orders in the Postpress Division (finishing) also increased in the first quarter thanks to drupa and were five percent up on the same period of the previous year at 114 million Euro (previous year: 109 million Euro). Quarterly sales amounted to 82 million Euro (previous year: 95 million Euro). The operating result for the period under review was minus 11 million Euro (previous year: minus four million Euro). This was caused by poor sales and the additional costs associated with drupa.
In the EMEA, North America, Latin America and Asia/Pacific regions, incoming orders were up on the previous year's level thanks to drupa. The improvement was particularly marked in Germany, but France also benefited greatly from orders placed at the trade show. drupa did not have the same impact on the Eastern Europe region as it did, for example, in Central Europe. Sales in all regions were down on the previous year's level for the first quarter.
The company does not expect to match the previous year's sales and operating result for the financial year 2008/2009 as a whole. Due to the uncertain economic situation worldwide and the volatile market environment, it will not be possible to provide a forecast of the key figures for the financial year 2008/2009 as a whole until later in the year. An outlook should be published no later than with the half-yearly results at the beginning of November 2008.
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