Heidelberger Druckmaschinen AG

  • WKN: 731400
  • ISIN: DE0007314007
  • Land: Deutschland

Nachricht vom 17.07.2019 | 22:09

Heidelberger Druckmaschinen AG: Cyclical reluctance to invest weighs on start of 2019/20 financial year

Heidelberger Druckmaschinen AG / Key word(s): Quarter Results/Forecast
Heidelberger Druckmaschinen AG: Cyclical reluctance to invest weighs on start of 2019/20 financial year

17-Jul-2019 / 22:09 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.


·       Key figures for 1st quarter down year-on-year

·       Sales forecast confirmed, margin target and expected net result after taxes adjusted

The business performance of Heidelberger Druckmaschinen AG (Heidelberg) in the first quarter (April 1, 2019 to June 30, 2019) of financial year 2019/20 was impacted in particular at the end of the reporting period by the increasing reluctance to invest and the corresponding shift in sales due to the economic downturn. In the traditionally weakest quarter of the year, the company recorded sales of EUR 502 million, compared with EUR 541 million in the same period of the previous year. Especially in Germany and parts of Europe, it was not possible to repeat the previous year's performance. Demand for contract offerings (service, software and supply contracts for consumables and, in the final stage, subscription contracts including equipment) developed positively, with the proportion of recurring revenues rising by almost 10 percent year-on-year to around EUR 80 million. Due to the ramp-up, however, it has not yet been possible to compensate for the overall decline in sales.
 
Despite significantly higher demand in China as a result of the positive outcome of the Print China trade fair, as at June 30, 2019, incoming orders were down on the previous year (EUR 665 million) at EUR 615 million. At around EUR 14 million (including the IFRS 16 effect of around EUR 4 million), EBITDA excluding restructuring result was also below the unadjusted prior-year figure of around EUR 20 million. After taxes, the Group reported a minus of around EUR 31 million (previous year: EUR -15 million). In view of the net working capital build-up during the year and investments in the expansion of digital business models, free cash flow was negative at EUR -83 million (previous year: EUR -45 million).
 
For the 2019/20 financial year as a whole, Heidelberg continues to anticipate sales at the previous year's level. Despite the economic downturn and the associated reluctance to invest in the equipment business, the company expects to compensate for this by further stable expansion of the contract business. However, the reluctance to invest is also leading to a product mix with lower overall profitability in the equipment business. The company is therefore adjusting its outlook for the operating result in the current financial year and is assuming a target margin for EBITDA excluding restructuring result in a range of 6.5 to 7 percent of sales (to date 7.5 to 8.0 percent). A break-even net result after taxes is now expected.  
 
Heidelberg will publish the complete interim statement of the 1st quarter 2019/20 as planned on August 6, 2019.

Contact:
Heidelberger Druckmaschinen AG

Corporate Public Relations
Thomas Fichtl
Phone: +49 (0)6222 82-67123
Fax: +49 (0)6222 82-67129
E-mail: thomas.fichtl@heidelberg.com

Investor Relations
Robin Karpp
Phone: +49 (0)6222 82-67120
Fax: +49 (0)6222 82-99 67120
E-Mail: robin.karpp@heidelberg.com

Important note:
 
This press release contains forward-looking statements based on assumptions and estimations by the Management Board of Heidelberger Druckmaschinen Aktiengesellschaft. Even though the Management Board is of the opinion that those assumptions and estimations are realistic, the actual future development and results may deviate substantially from these forward-looking statements due to various factors, such as changes in the macroeconomic situation, in the exchange rates, in the interest rates, and in the print media industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no warranty and does not assume liability for any damages in case the future development and the projected results do not correspond with the forward-looking statements contained in this press release.
 

Information and Explanation of the Issuer to this News:

Cyclical reluctance to invest weighs on start of 2019/20 financial year - sales forecast confirmed, margin target adjusted

The business performance of Heidelberger Druckmaschinen AG (Heidelberg) in the first quarter (April 1, 2019 to June 30, 2019) of financial year 2019/20 was impacted in particular at the end of the reporting period by the increasing reluctance to invest and the corresponding shift in sales due to the economic downturn. In the traditionally weakest quarter of the year, the company recorded sales of EUR 502 million, compared with EUR 541 million in the same period of the previous year. Especially in Germany and parts of Europe, it was not possible to repeat the previous year's performance. Demand for contract offerings (service, software and supply contracts for consumables and, in the final stage, subscription contracts including equipment) developed positively, with the proportion of recurring revenues rising by almost 10 percent year-on-year to around EUR 80 million. Due to the ramp-up, however, it has not yet been possible to compensate for the overall decline in sales.

Despite significantly higher demand in China as a result of the positive outcome of the Print China trade fair, as at June 30, 2019, incoming orders were down on the previous year (EUR 665 million) at EUR 615 million. At around EUR 14 million (including the IFRS 16 effect of around EUR 4 million), EBITDA excluding restructuring result was also below the unadjusted prior-year figure of around EUR 20 million. After taxes, the Group reported a minus of around EUR 31 million (previous year: EUR -15 million). In view of the net working capital build-up during the year and investments in the expansion of digital business models, free cash flow was negative at EUR -83 million (previous year: EUR -45 million).

Sales forecast confirmed, margin target adjusted - Management Board initiates measures to improve earnings and structure
For the 2019/20 financial year as a whole, Heidelberg continues to anticipate sales at the previous year's level. Despite the economic downturn and the associated reluctance to invest in the equipment business, the company expects to compensate for this by further stable expansion of the contract business.

'The increasing share of recurring contract business will have an increasingly stabilizing effect on our total sales,' said Rainer Hundsdörfer, CEO of the company. 'We will counter the negative impact on earnings with short-term measures and sustainable structural improvements.

The successful expansion of the contract business means that the customer relationship is sustained at a higher share of wallet as a basis for business that is more resistant to cyclical fluctuations. However, the reluctance to invest is also leading to a product mix with lower overall profitability in the equipment business. The company is therefore adjusting its outlook for the operating result in the current financial year and is assuming a target margin for EBITDA excluding restructuring result in a range of 6.5 to 7 percent of sales (to date 7.5 to 8.0 percent). A break-even net result after taxes is expected.

As a consequence of this development, the Management Board has decided to review planned investments, significantly increase cost discipline and use instruments to make working hours more flexible in the short term in order to stabilize the operating result. In addition, the projects initiated to increase efficiency (Operational Excellence) such as the optimization of the manufacturing footprint, the adjustment of sales structures to new business models and the expansion of shared services will contribute to reducing structural costs in the future. In addition to measures to stabilize earnings, free cash flow is expected to improve sustainably in the coming quarters as a result of the reduction in capital expenditure plans and the expected reduction in net working capital.

Investment projects in the new product and solution offerings from Heidelberg's ongoing digital transformation will be implemented as planned. The goal remains to strengthen the contract and subscription business with recurring revenues, to expand the share of wallet per customer and to significantly reduce the impact of economic cyclicality on the company. In the medium term, the share of sales from recurring contract business is to be increased to around 1/3 of total sales.

Heidelberg will publish the complete interim statement of the 1st quarter 2019/20 as planned on August 6, 2019.

Next important date:
The Annual General Meeting for financial year 2018/2019 is taking place in
Mannheim on July 25, 2019.

Image material, and additional information about the company are available in the Press Lounge of Heidelberger Druckmaschinen AG at www.heidelberg.com.

Heidelberg IR now on Twitter:
Link to the IR Twitter channel: https://twitter.com/Heidelberg_IR
On Twitter under the name: @Heidelberg_IR

Further information:
Corporate Communications

Thomas Fichtl
Phone: +49 6222 82-67123
Fax: +49 6222 82-67129
E-mail: Thomas.Fichtl@heidelberg.com

Investor Relations
Robin Karpp
Phone: +49 6222 82-67120
Fax: +49 6222 82-99 67120
E-mail: robin.karpp@heidelberg.com

Important note:

This press release contains forward-looking statements based on assumptions and estimations by the Management Board of Heidelberger Druckmaschinen Aktiengesellschaft. Even though the Management Board is of the opinion that those assumptions and estimations are realistic, the actual future development and results may deviate substantially from these forward-looking statements due to various factors, such as changes in the macroeconomic situation, in the exchange rates, in the interest rates, and in the print media industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no warranty and does not assume liability for any damages in case the future development and the projected results do not correspond with the forward-looking statements contained in this press release.


17-Jul-2019 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de



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