Heidelberg Drives Digital Transformation—20 Contracts Already Signed for New Subscription Model
Thursday, November 08, 2018
Press release from the issuing company
Six months into financial year 2018/2019, the launch of the new subscription model has led to further growth in incoming orders and the order backlog at Heidelberger Druckmaschinen AG (Heidelberg). No fewer than 20 subscription contracts covering the entire press life cycle – including service, software, and consumables – have been signed to date and demand for new machines remains healthy. As a result, incoming orders for the half-year have climbed by around 6 percent, from €1,234 million to €1,306 million. This figure would have been higher still had it not been for negative exchange rate movements amounting to €17 million. The order backlog improved by an impressive 23 percent, from €627 million to €774 million. Sales of up to €100 million, in particular for services and consumables, are expected over the standard five-year term of the subscription contracts already signed, which represent an annual sheet volume in the order of 1 billion pages.
“The subscription model offers huge potential. It’s transforming the market and also our company. We’re continuing to drive the digital transformation at Heidelberg,” commented Heidelberg CEO Rainer Hundsdörfer.
The implementation of the corporate strategy towards digitization is progressing. Printers in Europe, the US and China are already producing with high quality and productivity for their customers with the new Primefire digital printing system. With the newly founded Heidelberg Digital Unit, the e-commerce business will be rapidly expanded. As part of a digital roadmap, IT will also focus even more on efficient processes and the challenges of digital business models.
Half-year operating profit improves to €62 million
This meant the operating cash flow of €27 million did not quite match the previous year’s level of €35 million. An increase in inventories due to the growing order backlog and the start-up of digital operations as well as investments in the construction of the innovation center at the Wiesloch-Walldorf site were among the factors influencing the free cash flow in the reporting period (€–86 million compared with €–32 million in the previous year). At €373 million, equity was substantially up on the level as at March 31, 2018 (€341 million), and the equity ratio improved accordingly, from 15 to 17 percent. Despite seasonal factors resulting in a higher net financial debt of €320 million (previous year: €259 million), the leverage of 1.8 as at September 30, 2018 was once again well below the target level of 2.
“As demonstrated in October with the acquisition of MBO, we’re investing in the company’s digital transformation. This highlights our strategic focus on consistently aligning our portfolio and new business models with the growth segments of digital and packaging,” said Heidelberg CFO Dirk Kaliebe.
Forecast for financial year as a whole unchanged – moderate growth in net sales and net profit after taxes expected
Subscription model significantly increases order backlog – growing impact on net sales and result in years to come
Heidelberg IR now on Twitter:
The scheduled publication date for the financial statements for the third quarter of 2018/2019 is February 7, 2019.
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