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Heidelberg Reports Earnings: Sales stable, Incoming orders down

Press release from the issuing company

11/6/07 -- Heidelberg is publishing its financial statements for the first six months of financial year 2007/2008 (April 1 to September 30, 2007). At 1.639 billion Euro, Heidelberg Group sales in the first six months of the year remained at last year's high level (previous year: EUR 1.628 billion) despite the strength of the euro. After adjustments for exchange rate movements, they would be three percent up on the previous year. Incoming orders in the period under review amounted to 1.866 billion Euro (previous year: 1.996 billion Euro). The decline compared to the same period the previous year is attributable to the high volume of orders received at the Ipex trade show in April 2006. The order backlog at September 30 remained healthy at 1.184 billion Euro (previous year: 1.343 billion Euro).
"The positive development of the global economy is continuing, albeit slightly less dynamically," stated Bernhard Schreier, CEO of Heidelberger Druckmaschinen. "The economy is currently being boosted by Europe and the emerging markets. In particular in China the propensity to invest in the print media industry is picking up again, now that the customs situation there has been clarified," he continued. 
The Heidelberg Group recorded an operating result of 96 million Euro in the first six months (previous year: 118 million Euro). The downward movement compared to the previous year must be seen in the context of a result last year that included one-time effects amounting to approximately 25 million Euro, among other things from the sale of the Linotype shareholding. The net profit after six months was 44 million Euro (previous year: 68 million Euro).
"With an operating return on sales of around six percent, we are on our expected course to meet our targets for the year as a whole," stated Heidelberg CFO Dirk Kaliebe. "The detrimental effect of exchange rate movements and high energy and raw material costs have made life difficult," he went on to explain.
At September 30, 2007, the Heidelberg Group had a workforce of 19,436 worldwide (previous year: 18,808). In the first six months (April 1 to September 30, 2007), Heidelberg took on 265 new employees, mainly in production.
Results in the Press and Postpress divisions
In the Press Division (offset printing), sales stood at a level of 1.424 billion Euro in the first six months (previous year: 1.423 billion Euro). Incoming orders in the period under review stood at 1.632 billion Euro (previous year: 1.762 billion Euro). The operating result in the first half-year was 81 million Euro (previous year: 96 million Euro, including one-time effects amounting to approximately 25 million Euro). 
In the Postpress Division (finishing), half-yearly sales were seven percent up at 199 million Euro (previous year: 186 million Euro). Incoming orders totaled 218 million Euro (previous year: 215 million Euro). In the period under review, an operating loss of four million Euro was recorded (previous year: break-even).
Sales in the Latin America and Eastern Europe regions in the first half-year exceeded the equivalent figures for the previous year. Figures for North America, EMEA and Asia/Pacific were close to the previous year's high level. The higher volume of orders on the Chinese market was, among other things, a result of the customs situation there being clarified.
Outlook for financial year 2007/2008 unchanged
During the next three-year period, from 2007/2008 to 2009/2010, the company expects total sales to increase by 10 to 15 percent. In the current financial year 2007/2008, Heidelberg predicts moderate growth in sales in the run-up to drupa 2008. As regards exchange rate movements, the company has based its forecasts on exchange rates of 1.28 U.S. dollars to the euro and 148 Japanese yen to the euro and hedged the exposure adequately.
In financial year 2007/2008, Heidelberg is looking to increase its pure operating result by 10 to 15 percent - compared to the adjusted value for the previous year of 302 million Euro. This marks out a target operating result for 2007/2008 of 330 million Euro to 345 million Euro.
The positive effects of the German tax reform and internal optimization measures with regard to the tax rate will also play their part in further increasing the net profit. Overall, the company expects an increase in the net profit - excluding one-time effects - of around four percent of sales in the previous year to about five percent in financial year 2007/2008.