HEIDELBERG, Germany--June 7, 2005-- Earnings by Heidelberger Druckmaschinen AG turned around in financial year 2004/2005 (April 1, 2004 to March 31, 2005). "Even if the markets and the global economy did not exhibit the robust growth that we had hoped for, particularly in recent months, the figures nevertheless show that we are on the right track and that our measures are beginning to take hold," stated Bernhard Schreier, CEO of Heidelberger Druckmaschinen AG. Sales of the Heidelberg Group during the period under review grew 3 percent to Euro 3.207 billion (previous year: Euro 3.114 billion) and by 5 percent after adjustments for exchange rate movements. Sales of the largest division, the Press Division (offset printing), increased by around 5 percent to Euro 2.797 billion, or by 7 percent after adjustment for exchange rate movements. The free cash flow was well above the previous year at Euro 154 million, and thereby clearly exceeded expectations. Incoming orders in the financial year just closed were Euro 3.508 billion (previous year: Euro 3.247 billion) and were therefore 8 percent higher than last year's figure. The order backlog at March 31, 2005 was noticeably higher than one year ago. It exceeded Euro 1 billion and, consequently, was almost Euro 300 million higher than at the end of financial year 2003/04. "The operating profit - including the operating loss from NexPress - improved from Euro 10 million to about Euro 160 million," explained Heidelberg's CFO, Dr. Herbert Meyer. "Through the deep restructuring of Heidelberg, we achieved this major improvement in earnings which will have continuing effects." The operating profit of the continuing operations improved by Euro 33 million to Euro 207 million, or around 6.5 percent of sales. The net profit for the Heidelberg Group amounted to Euro 61 million (previous year: Euro -695 million). This corresponds to a return on sales after tax of 1.8 percent. The Management and Supervisory Boards will propose that the Annual General Meeting on July 20, 2005 approves a dividend of Euro 0.30 per share for the year under review. As of March 31, 2005, the Heidelberg Group had a workforce of 18,679 worldwide (previous year: 22,782). The fall of 18 percent is primarily due to the sale of the Digital and Web Systems divisions. Results in the Press and Postpress Divisions improved In the Press Division (offset printing), sales in the financial year just closed rose by approx. 5 percent to Euro 2.797 billion. Incoming orders in the period under review increased by 10 percent on the previous year to around Euro 3.087 billion. The operating profit for 2004/2005 was Euro 183 million (previous year: Euro 151 million). In the Postpress Division (finishing), sales in the period under review were Euro 348 million. Incoming orders were Euro 359 million. The operating profit in this division improved to Euro -2 million (previous year: Euro -18 million). Sales in all regions were up on the previous year, with the exception of North America. Incoming orders improved on last year's figures in all regions, climbing around 8 percent on average. Heidelberg expands assembly capacity on growth market China The new production site in China is being constructed this financial year in the "Shanghai Qingpu Industrial Zone" to the west of Shanghai. The appropriate contractual agreements have been signed and the license to trade has already been issued. The factory, which is still to be constructed and is intended to provide 5,000 sq m of production space , is scheduled for completion by the start of 2006. Delivery of the first postpress products is also expected to start at the beginning of 2006. Employee training and the assembly of the first folders in a temporary building will begin well in advance. Heidelberg is looking to begin manufacturing printing presses in A3 format for the Chinese market as soon as possible after completing the necessary preparatory work. Heidelberg's total investment volume for the site in China amounts to approx. Euro 10 million.. The Company plans to increase the workforce at the new site in the medium term to around 200. Outlook: Sales and earnings for 2005/2006 expected to improve on previous year The Company expects to see moderate growth in sales for the current financial year 2005/2006 on a comparable basis. At the beginning of the year, the high order backlog will provide a solid foundation for sales growth. During the current financial year, Heidelberg is planning to surpass the result of operating activities of financial year 2004/2005 of Euro 167 million as well as the after-tax result of Euro 61 million.