Heidelberg initiates next stage of Group's reorganization - target EBITDA margin of no less than 8 percent to be achieved by financial year 2015/2016

Heidelberg (ots) -

- Target result for financial year 2013/2014 achieved with net
profit of EUR 4 million

- Strategic reorientation supported by new anchor investor

- Acquisitions in growth areas - digital, services and
consumables

- New business models for product areas with weak margins

- Further consolidation of site structure

- Outlook: Further earnings improvements planned in financial
year 2014/2015 - target EBITDA margin of no less than 8 percent
in financial year 2015/2016

Following five years of losses, Heidelberger Druckmaschinen AG
(Heidelberg) has achieved its key goal of making an annual profit.
The net profit for financial year 2013/2014 (April 1, 2013 to March
31, 2014) was EUR 4 million (previous year: EUR -117 million). The
next step is to secure the Group's sustained profitability in the
years ahead by expanding growth segments, implementing portfolio
measures and introducing structural cost projects. The aim is to
achieve an EBITDA margin of no less than 8 percent by financial year
2015/2016.

"In returning to profitability, we have reached a first important
milestone," said Heidelberg CEO Gerold Linzbach. "We are now starting
the next stage of the Group's reorganization so as to achieve a
sustained increase in corporate value. This involves making
acquisitions in growth segments, scaling down areas of business with
weak margins, and cutting structural costs in order to further
improve profitability," he added.

Strategic reorientation supported by new anchor investor

Heidelberg is further developing its digital portfolio with the
planned complete takeover of the Gallus Holding AG. In fall this
year, Heidelberg and Gallus will be unveiling a new digital printing
system for the label market based on Fujifilm technology. Ferdinand
Rüesch will also become a new strategic anchor investor of the
company by acquiring around 9 percent of Heidelberg shares in return
for the Gallus stake. At the same time, Heidelberg is strengthening
its capital structure, which will support the company's strategic
reorientation.

"Our aim in acquiring Gallus is to achieve fast and profitable
growth in the digital label sector. What's more, a strategic investor
with experience in this sector will ensure the stability of both the
shareholder and capital structures," said Linzbach.

Acquisitions in growth areas - digital, services and consumables

Heidelberg sees particularly good opportunities for growth in the
expansion of its activities involving services and consumables, which
benefit from strong margins. Following the successful takeover of a
coating manufacturer, discussions on a further acquisition are
currently under way.

As part of the collaboration with Fujfilm, an OEM agreement to
supply platesetters (CtP) has also been concluded. Fujifilm will
market Heidelberg platesetters under its own name in future, while
Heidelberg has taken over some European sales activities for Fujifilm
printing plates. As regards services, the marketing of new service
products has gotten off to a successful start. The portfolio now also
includes consulting, which extends beyond simply providing technical
services and is intended to achieve a concrete, measurable
improvement in customer results.

New business models for product segments with weak margins

The portfolio analysis conducted last year showed that the only
way to achieve economic success in some product areas is to switch to
new business models. Over the next six months, the company is
therefore planning to take decisions on discontinuing some operations
or radically altering the vertical range of manufacture, in some
cases with the involvement of partners.

Further consolidation of site structure Ongoing projects to boost
efficiency have already led to a streamlining of structures at the
Group's key sites in Heidelberg and Wiesloch/Walldorf. By the end of
financial year 2014/2015, there are plans to integrate the
administrative headquarters into the Wiesloch/Walldorf production
site. This will involve the relocation of the Management Board and
some 500 employees. This step will further improve the harnessing of
synergies between the two sites and lead to annual savings in
operating costs in the low single- digit million euro range. It will
also create the world's largest demonstration print shop for both
packaging and commercial printing, where customers will get a live
insight into the interplay of printing technology, future-focused
service concepts and consumables.

"The Heidelberg corporate culture is entering a new era. The key
focus when taking decisions will be on both our customers' results
and our own. We are bringing key functions and operational areas into
closer proximity and are gearing our activities more toward the
market and our customers. This will make Heidelberg leaner and more
profitable. The measures we are planning in the current financial
year will lay the foundation for achieving an EBITDA margin of no
less than 8 percent by financial year 2015/2016," concluded Linzbach.

Target result for financial year 2013/2014 achieved with net
profit of EUR 4 million

Although factors such as exchange rate movements resulted in a
decline in Group sales from the previous year's figure of EUR 2.735
billion to EUR 2.434 billion (EUR 2.536 billion after adjustment for
exchange rate movements) in reporting year 2013/2014, all result-
related KPIs were far better than in the previous financial year. For
example, EBITDA excluding special items rose to EUR 143 million in
the financial year just closed (previous year: EUR 80 million). This
led to an improvement in the EBITDA margin from about 3 percent to
approx. 6 percent. Within twelve months, the result of operating
activities (EBIT) excluding special items climbed from EUR -3 million
in the previous year to EUR 72 million. Special items in the
reporting period amounted to EUR -10 million (previous year: EUR -65
million) and the financial result was EUR -60 million (previous year:
EUR -59 million). This led to a net profit for the year of EUR 4
million (previous year: EUR -117 million).

Positive cash flow and free cash flow - further reduction in net
debt, with leverage < 2

The cash flow and free cash flow were both positive in the
reporting year. Reducing the company's capital commitment has
compensated for payments for the Focus efficiency program totaling
some EUR 95 million and enabled a positive free cash flow of EUR 22
million to be achieved (previous year: EUR -18 million). This reduced
the net debt at the end of the financial year to EUR 238 million
(previous year: EUR 261 million).

"Not only have we achieved all our results targets, but our asset
and net working capital management program has also brought further
successes in terms of cash flow and free cash flow and thus reducing
our net debt," said Heidelberg CFO Dirk Kaliebe. "At the end of the
financial year, we thus achieved our goal of reducing the leverage
(net financial debt divided by EBITDA) to less than two for the first
time in many years," he added.

During the reporting year, the company's financing structure was
further optimized and appropriately diversified - with regard to both
financing sources and maturity profile. Heidelberg currently has
total credit facilities of about EUR 790 million at its disposal
until financial year 2017/2018.

"Our stable financing framework and the stronger capital structure
due to the new anchor investor give us the freedom to carry out our
planned strategic measures promptly," stressed Kaliebe.

Outlook: Plans to improve result in financial year 2014/2015 -
target EBITDA margin of no less than 8 percent in financial year
2015/2016

Heidelberg is expecting to match the sales achieved in the
reporting year in the current financial year 2014/2015. As in the
previous year, sales are once again expected to be higher in the
second half of the financial year than in the first.

Having succeeded, as forecast, in achieving a positive annual
result in reporting year 2013/2014, the declared goal for financial
year 2014/2015 is to further improve the company's profitability in
order to get closer to the medium-term objective of an operating
margin of no less than 8 percent in terms of EBITDA and improve the
result after taxes in spite of the higher level of interest expense
for financial liabilities. The extent of the improvement in the
current financial year 2014/2015 will essentially depend on the
realizability and timing of the portfolio optimization measures that
represent the strategic focus from this year onward. Provided the
initiatives to improve the margin and optimize the portfolio are
successfully implemented in the current financial year, the company
expects to be able to achieve a margin of no less than 8 percent
EBITDA on sales by financial year 2015/2016. The planned earnings
improvements, combined with the measures to reduce or efficiently use
the tied-up capital, should strengthen the capital structure and keep
the net financial debt at a low level. This will create the
conditions required to optimize the financial result as targeted.

As of March 31, 2014, the Heidelberg Group had a global workforce
of 12,539 plus 502 trainees (previous year: 13,694 plus 521
trainees).

Images and further company information are available in the press
portal of Heidelberger Druckmaschinen AG at www.heidelberg.com.

The 2013/2014 annual report can be accessed at 7 a.m. CET on June
11, 2014 at www.heidelberg.com.

Other dates: The Heidelberg Annual General Meeting will take place
on July 24, 2014.

The figures for the first quarter of financial year 2014/2015 are
due to be published on August 13, 2014.

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 macro-economic 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.

For further information, please contact:
Heidelberger Druckmaschinen AG

Corporate Public Relations
Thomas Fichtl
Phone +49 (0)6221 92-5900
Fax: +49 (0)6221 92-5088
E-mail: thomas.fichtl@heidelberg.com

Investor Relations
Robin Karpp
Phone: +49 (0)6221- 92 6020
Fax: +49 (0)6221- 92 5189
E-mail: robin.karpp@heidelberg.com