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Heidelberg 2006/2007: Targets Achieved, Further Improvement in Earning

Press release from the issuing company

June 13, 2007 -- Heidelberg clearly increased both 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. "For the current financial year, we are expecting moderate growth in the volume of business," he added.

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 comparable basis.

Incoming orders in the financial year just closed were 3.853 billion Euro (previous year: 3.605 billion Euro), 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 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 operating result to 362 million Euro, significantly 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 one-time effects from asset management of around 60 million Euro, resulting primarily from the sale of Linotype GmbH and the Research and Development Center in Heidelberg ("sale and lease back"). During the course of the year, this helped compensate most of the higher spending on R&D, investments in new generations of printing presses, more unfavorable exchange rates, and a decline in sales in China.

The net profit climbed to 263 million Euro (previous year: 135 million Euro) and included a positive one-time effect in the form of a corporate income 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 (previous year: 149 million Euro) as a result of tight asset management.

"Last financial year, we once again saw a significant improvement 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 strengthening the company's sustainable profitability. As described in the outline of prospects, we expect business to continue to develop positively due to the stability in the industry in most regions and the Heidelberg Group's improved cost structures," he added.

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), sales in the financial year just closed rose by approximately six percent to 3.321 billion Euro. Incoming orders in the period under review increased by seven percent on the previous year to 3.367 billion Euro. The operating result for 2006/2007 was 314 million Euro (previous year: 248 million Euro).

In the Postpress Division (finishing), sales in the period under review rose by around 12 percent to 445 million Euro. Incoming orders increased by some nine percent to 449 million Euro. The operating result of this division for the period under review was seven million Euro (previous year: loss of three million Euro).

In the EMEA, North America, Latin America and Eastern Europe regions, 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 import duty exemption in China, which took effect from the second quarter, postponed incoming orders and sales.

Dividend proposal
At the Annual General Meeting on July 26, 2007, the Management Board and the Supervisory Board will propose increasing the dividend from last year's level of 0.65 Euro per share to 0.95 Euro per share for 2006/2007.

Prospects for financial year 2007/2008: moderate increase in sales and net profit roughly equivalent to five percent of sales expected
During the next three-year period, from 2007/2008 to 2009/2010, the company expects to increase total sales by ten to 15 percent. In the current financial year 2007/2008, Heidelberg predicts a moderate growth in sales in the run-up to drupa 2008.

In 2006/2007, the year under review, the result of operating activities included positive one-time effects amounting to around 60 million Euro. In the current financial year 2007/2008, Heidelberg is looking to increase the pure operating result by ten to 15 percent compared to the adjusted value for the year under review of 302 million Euro. This represents a target result of operating activities for 2007/2008 of 330 million Euro to 345 million Euro.

Also benefiting from the positive effects of the German tax reform and from internal optimizations to ease the tax burden, the net profit will continue to grow. Overall, the company predicts an increase in the net profit - excluding one-time effects - of around four percent of sales for the year under review to about five percent in the current financial year 2007/2008.

Share buyback
On November 7, 2006, Heidelberger Druckmaschinen AG began a second share buyback program which plans up to five percent of the company's capital stock - a maximum of 4,152,535 shares - to be repurchased 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 cancelled 3,322,658 shares from the first and second buyback programs. The company's capital stock now amounts to 204,103,795.20 Euro and is divided into 79,728,045 bearer shares.

The tables showing the figures as well as further information can be downloaded from the Press Lounge at www.heidelberg.com.