Financial Year 2008/2009 – Heidelberg Presents Final Half-Yearly Figures

  
    
  
  
    
      In the first six months of financial year 2008/2009 (April 1, 2008 to 
      September 30, 2008), Heidelberger Druckmaschinen AG (Heidelberg) (FWB: 
      HDD) matched the previous year’s incoming 
      orders thanks to the industry trade show drupa in May 2008. Looking 
      at the second quarter (July to September 2008) in isolation, incoming 
      orders fell sharply by around 23 percent due to the continuing financial 
      crisis and the resultant global economic uncertainties. Incoming orders 
      for the Heidelberg Group in the period under review totaled EUR 1.872 
      billion (previous year: EUR 1.866 billion), EUR 721 million of this in 
      the second quarter (previous year: EUR 932 million). Sales by the 
      Heidelberg Group in the first two quarters amounted to EUR 1.461 billion 
      (previous year: EUR 1.639 billion). In the second quarter, Heidelberg 
      achieved sales of EUR 804 million (previous year: EUR 897 million). This 
      figure was lower than expected. The order backlog at the end of 
      the second quarter was EUR 1.206 billion (previous quarter to June 30, 
      2008: EUR 1.298 billion).
    
    
      The operating result of the Heidelberg Group in the second 
      quarter of financial year 2008/2009 was well into negative figures at 
      EUR -50 million (previous year: EUR 70 million). This result includes 
      special items totaling EUR 40 million, among them a EUR 22 million 
      provision from the collective labor agreement for partial retirement and 
      the outlay for the package of cost-cutting measures. After adjustments 
      for special items, the operating result for the second quarter was 
      EUR -10 million. Falling sales and the resultant low profit 
      contributions, the start of series production for new products, higher 
      raw material prices, and the remaining costs for drupa all burdened 
      results during the second quarter. The cumulative operating result after 
      two quarters was EUR -85 million (previous year: EUR 96 million) and the net 
      result in the first six months was EUR -95 million (previous year: 
      EUR 44 million).
    
    
      “We are working harder and faster to adapt 
      our structures and costs to the gloomy economic forecasts and the 
      industry's reluctance to invest,” stated 
      Heidelberg CEO Bernhard Schreier. “We are 
      sticking with our strategic approach and our comprehensive range of 
      products and services. Despite our reduced budget, we will maintain our 
      leading market position. We need to use the measures initiated to 
      stabilize the earnings situation until there is an improvement in the 
      overall economic climate,” he continued.
    
    
      After the first six months of the financial year, the free cash flow 
      stood at EUR -273 million (previous year: EUR -43 million). The figure 
      for the second quarter on its own was EUR -62 million.
    
    
      At September 30, 2008, the Heidelberg Group had a workforce of 
      19,865 (19,596 at March 31, 2008). Adjusted to take into account the 
      number of trainees and the employees of Heidelberg Graphic Equipment 
      Ltd. in Shanghai and Hi-Tech Coatings, which were newly consolidated in 
      the year under review, the total workforce fell by 129 in the first six 
      months.
    
    
      Results in the Press and Postpress divisions
    
    
      In the Press Division (offset printing), sales stood at EUR 1.268 
      billion in the first six months (previous year: EUR 1.424 billion). 
      Incoming orders in the period under review amounted to EUR 1.654 billion 
      (previous year: EUR 1.632 billion). The operating result in the first 
      six months totaled EUR -78 million (previous year: EUR 81 million).
    
    
      In the Postpress Division (finishing), half-yearly sales fell to 
      EUR 180 million (previous year: EUR 199 million). Incoming orders 
      amounted to EUR 205 million (previous year: EUR 218 million). Above all 
      due to falling sales, the operating result for the period under review 
      was down on the previous year at EUR -18 million (previous year: EUR -4 
      million).
    
    
      As expected following the high level of orders generated at drupa, 
      incoming orders fell in the second quarter in the EMEA, North America 
      and Asia/Pacific regions. Orders remained stable in the Eastern 
      Europe region and increased in the Latin America region. Thanks mainly 
      to orders from the Brazilian market, this region was 26 percent up on 
      the same quarter of the previous year. There was also a significant 
      improvement of 18 percent in the half-yearly figure. Sales in all 
      regions for the first six months were down on the previous year’s 
      level.
    
    
      Difficult business situation expected – 
      cost-cutting program stepped up
    
    
      Heidelberg expects a significant downturn in sales and thus a marked 
      reduction in operating result (EBIT) for the current financial year 
      (April 1, 2008 to March 31, 2009) compared to last year. The financial 
      result is also expected to be down due to the current financial crisis 
      and the movements in interest rates. These developments coupled with the 
      restructuring costs will lead to a significant annual deficit in the 
      current financial year.
    
    
      Because of the unpredictable nature of the current financial crisis and 
      its impact on customers’ investment 
      decisions, Heidelberg will not, contrary to earlier announcements, 
      provide a quantitative forecast for the current financial year. 
      Financial year 2009/2010 is even more difficult to forecast and the 
      Management Board does not currently expect any change for the better 
      given the current developments.
    
    
      In the light of the significant fall in sales and earnings, Heidelberg 
      is extending its existing package of cost-cutting measures to around EUR 
      200 million and accelerating its implementation. Instead of the total 
      cuts of EUR 75 million announced so far, the total package will now 
      yield savings of EUR 150 million to EUR 180 million as early as 
      financial year 2009/2010. Further measures in financial year 2010/2011 
      will boost total savings to around EUR 200 million.
    
    
      Given this additional need for restructuring, the overall costs for the 
      extended package of measures will rise to EUR 130 million to EUR 150 
      million. The restructuring measures already include provisions from the 
      collective labor agreement for partial retirement recently signed for 
      the metal industry. Most of the restructuring costs are expected to 
      arise in financial year 2008/2009.
    
    
      The table with the figures for the second quarter of 2008/2009 is 
      available online at www.heidelberg.com.
    
    
      Important note:
    
    
      This Press Information contains statements about future development that 
      are based on assumptions and estimates by the management of Heidelberger 
      Druckmaschinen Aktiengesellschaft. Even if the management is of the 
      opinion that these assumptions and estimates are accurate, future actual 
      developments and future actual results may differ significantly from 
      these assumptions and estimates due to a variety of factors. These 
      factors can include changes to the overall economic climate, changes to 
      exchange rates and interest rates and changes in the graphic arts 
      industry. Heidelberger Druckmaschinen Aktiengesellschaft provides no 
      guarantee that future developments and the results actually achieved in 
      the future will agree with the assumptions and estimates set out in this 
      press release and assumes no liability for such.