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Heidelberg Profit Up, Sales Rise 6%

Thursday, May 10, 2007

Press release from the issuing company

5/9/07 -- Preliminary figures indicate that Heidelberg increased sales and earnings in financial year 2006/2007 (April 1, 2006 to March 31, 2007). "For the fourth year in succession, we have been able to draw on the upswing in the global economy and the resultant upward trend in our industry," stated Bernhard Schreier, CEO of Heidelberger Druckmaschinen AG. Preliminary sales by the Heidelberg Group during the period under review climbed six percent to 3.803 billion Euro (previous year: 3.586 billion Euro). The fourth quarter alone returned sales of 1.214 billion Euro, the highest level in the last five years on a like for like basis. Preliminary incoming orders in the financial year just closed were 3.853 billion Euro (previous year: 3.605 billion Euro), and thus around seven percent up on the previous year. The Heidelberg Group thus succeeded in increasing incoming orders for the third successive year. At around one billion Euro, the preliminary order backlog at March 31, 2007 was on a par with the previous year's high level. In the period under review, the Heidelberg Group increased its preliminary operating profit to 362 million Euro, 30 percent up on the previous year (previous year: 277 million Euro). This produced an EBIT margin of 9.5 percent of sales (previous year: 7.7 percent). A number of factors contributed to this result, including positive non-recurring asset management items of around 60 million Euro, resulting primarily from the sale of Linotype GmbH and the R&D building in Heidelberg ("sale and lease back"). During the course of the year, this helped to compensate the higher spending on R&D, investments in new generations of printing presses, less favorable exchange rates and a decline in sales in China. The preliminary net profit climbed to 263 million Euro (previous year: 135 million Euro) and included a positive non-recurring item in the form of a corporation tax credit of 73 million Euro. This credit relates to a change in the way existing tax credits are treated and has no impact on the level of future dividends. The free cash flow also increased substantially to 229 million Euro as a result of tight asset management. "Last financial year we achieved strong improvements in earnings and free cash flow and in essence reached the targets we had set ourselves," stated Heidelberg CFO Dirk Kaliebe. "All in all, we have taken another sizeable step towards bolstering the company's sustainable profitability." As of March 31, 2007, the Heidelberg Group had a workforce of 19,171 worldwide (previous year: 18,436). This figure includes new appointments - primarily at Heidelberg production facilities - and, for the first time, 156 employees from the initial consolidation of BHS Druck- und Veredelungstechnik GmbH, Weiden, a subsidiary of the Gallus Group. Results in the Press and Postpress Divisions In the Press Division (offset printing), preliminary sales in the financial year just closed rose by approx. six percent to 3.321 billion Euro. Preliminary incoming orders in the period under review increased by seven percent on the previous year to 3.367 billion Euro. The preliminary operating profit for 2006/2007 was 314 million Euro (previous year: 248 million Euro). In the Postpress Division (finishing) preliminary sales in the period under review rose by around 12 percent to 445 million Euro. Preliminary incoming orders increased by some nine percent to 449 million Euro. The preliminary operating profit of this division for the period under review was seven million Euro (previous year: minus three million Euro). In the EMEA, North America, Latin America und Eastern Europe regions, preliminary sales and incoming orders showed a considerable improvement on the previous year. In the Asia/Pacific region figures fell short of the high levels of the previous year. The suspension of the import duty exemption in China, which took effect since the second quarter, postponed incoming orders and sales. The restoration of the import duty exemption on March 1, 2007 suggests that the order and supply situation for the Chinese market will start to show improvement in the current 2007/2008 financial year. Dividend proposal and outlook The dividend proposal - for approval by the Annual General Meeting on Thursday, July 26, 2007 - and the outlook for the 2007/2008 financial year will be announced at the Heidelberg Annual Press Conference on Wednesday, June 13, 2007. Share buyback On November 7, 2006, Heidelberger Druckmaschinen AG began a second share buyback program which plans to repurchase up to five percent of the company's share capital - a maximum of 4,152,535 shares - on the stock market by January 2008 at the latest. By the end of the 2006/2007 financial year, on March 31, 2007, 2,419,422 shares had been bought back through this program. At the end of the financial year just closed, Heidelberg had cancelled 3,322,658 shares from the first and second buyback programs. The company's share capital now amounts to 204,103,795.20 Euro and is divided into 79,728,045 bearer shares.




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