Heidelberg with a Solid Start to the New Financial Year – Order Backlog Growing Thanks to Subscription Model
Tuesday, August 07, 2018
Press release from the issuing company
Heidelberger Druckmaschinen AG (Heidelberg) has started off the 2018/2019 financial year with growth in net sales and result. High demand for the newly established subscription model and the launch of series production of the Primefire digital press are demonstrating the potential the digital transformation offers the company. Incoming orders, for example, improved in the first quarter (April 1 to June 30) by 6 percent to €665 million. Furthermore, the previous year’s figure of €629 million benefited from the Print China trade show. The order backlog grew by 18 percent to €714 million (previous year: €603 million), partly due to subscription contracts, particularly in terms of life cycle business, i.e. services and consumables.
?The first quarter brought in the first revenues raised from subscription contracts, which generate recurrent sales over a term that usually lasts five years. However, Heidelberg also recorded growth in traditional business during the first quarter, with sales rising by 9 percent in total to €541 million, despite negative currency effects. Had exchange rates remained similar, revenues would have risen by around 11 percent.
“The strong customer demand for our new subscription portfolio and digital packaging printing presses has exceeded our expectations. Heidelberg is driving digitization in the entire industry. The establishment of the new business models is proceeding to plan and will at first make a relatively modest contribution to net sales and result, albeit one that will increase significantly in the medium term,” commented Rainer Hundsdörfer, CEO of Heidelberg.
Operating profit at the start of the year
At €3 million, operating cash flow was on a par with the same quarter in the previous year (€1 million). Free cash flow of €-45 million in the quarter under review (previous year: €-13 million) can be attributed to a build-up in inventories due to the growing order backlog, investments in building the innovation center at the Wiesloch-Walldorf site and a non-recurring increase in leasing payments for buildings. At €332 million, equity was at the same level as on the annual reporting date of March 31, 2018. The equity ratio was unchanged at around 15 percent. Despite the higher net financial debt, which is typical for the season and amounted to €278 million on June 30, 2018 (previous year: €234 million), leverage was 1.4, meaning it is still well below the target value of 2.
“Our financing structure is very solid. We have low leverage and are maintaining liquidity reserves we can use to finance our planned investments in new business models and the company’s digital transformation,” said Heidelberg CFO Dirk Kaliebe.
Outlook unchanged: Moderate growth in sales and net profit after taxes anticipated for 2018/2019 financial year
Subscription model to play an ever-greater part in increasing net sales and result
On the whole, Heidelberg is on course to achieve its targets for 2018/2019, although these new business achievements will have a limited impact as they are still in their early stages. This strong demand validates the Management Board’s medium-term targets for the period leading up to 2022, which are to see Group sales increase by €500 million to around €3 billion, EBITDA go up to €250 – 300 million and net profit after taxes rise to at least €100 million.
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