Heidelberg systematically gears portfolio toward profitability and growth - clearly positive EBITDA for first half of financial year 2014/2015

Heidelberg (ots) -

- Restructuring of Group continued for sustained profitable
growth:
- Postpress business realigned
- Leaner, more flexible production structures in sheetfed
offset equipment sector
- Targeted takeovers to invest in growth areas of consumables
and digital

- Half-year EBITDA, including income from Gallus transaction,
climbs to EUR 53 million - decline in sales in line with
expectations

- Outlook: Restructuring of portfolio emphasizes target EBITDA
margin of at least 8 percent in financial year 2015/2016

As announced at the Annual Press Conference in June, Heidelberger
Druckmaschinen AG (Heidelberg) is systematically gearing its
portfolio toward profitability and growth. The company has completed
the realignment of its postpress business as planned and on schedule.
At the end of October, Heidelberg signed a cooperation agreement with
Masterwork Machinery Co., Ltd in China covering postpress packaging
equipment. Under this agreement, the Chinese company Masterwork will
develop and manufacture future products and solutions for this market
segment; marketing and service outside China and Japan will remain in
the hands of Heidelberg. The two companies have also agreed to
consider joint production of components in China. Negotiations with
employee representatives regarding a reduction in the workforce at
the Ludwigsburg site have been completed and agreement has been
reached on the closure of the Leipzig site. The aim is to place
postpress on a profitable footing by focusing on competitive products
and to improve the result by approximately EUR 30 million from the
next financial year onward by adapting the business model.

Leaner, more flexible structures in sheetfed offset equipment
sector

In new sheetfed offset machinery business, profitability is to be
increased in the near future and this area is to be adapted to the
fluctuations in demand that are typical for the market by increasing
flexibility. To this end, product modularization and standardization
will be advanced further in order to achieve economies of scale
despite the reduced production volume. As part of these measures, the
break-even point for operating profit in this area is to be lowered
further by the end of the year by adjusting personnel capacity.

Acquisitions in growth areas of consumables and digital

As previously announced, expansion in the profitable and less
cyclical consumables business area is another key strategic goal for
Heidelberg. The takeover of Belgian consumables supplier BluePrint
Products NV marks an initial step in this direction and provides
Heidelberg with vital know-how in the development and manufacture of
printing chemicals. BluePrint offers a comprehensive range of
dampening solutions and washing agents for presses and has a highly
innovative approach to environmentally friendly products. Heidelberg
has been working with this company for some time and will be
incorporating BluePrint's entire product portfolio into its global
sales network.

"Following the strategic focus on returning to profitability in
the previous financial year, this year will see Heidelberg taking key
steps to enhance its portfolio. This will involve further expanding
growth areas to enhance the company's profitability and secure it
long term," said Heidelberg CEO Gerold Linzbach. "The goal of our
active portfolio management is for our service- and consumables-
based business, which benefits from high margins and is less
cyclical, to account for a share of Group sales of more than 50
percent.

The company is also systematically channeling its energies into
the external growth of its promising digital business, with the
complete takeover of software manufacturer Neo7even in October and
the launch of new digital printing systems with cooperation partners
Fujifilm and Ricoh during the same period. The target is to generate
annual sales of over EUR 200 million in the digital sector in the
medium term.

Well on track after first half-year of 2014/2015 with EBITDA
increased to EUR 53 million

The half-yearly figures for financial year 2014/2015 (April 1 to
September 30, 2014) reflect the success of the initiatives to boost
efficiency on a lasting basis but are also influenced by the measures
to restructure the portfolio and the associated non-
recurringeffects.

At EUR 996 million (HY1-2013/2014: EUR 1,097 million), Group sales
after six months were in line with expectations in all regions except
Asia. The company saw a particular decline in new machine sales in
China.

As a result of the measures initiated to improve margins and
profitability, the company was nevertheless able to increase both
EBITDA and EBIT, each excluding special items, in the reporting
period year-on-year. In addition to this, the complete takeover of
Gallus in Switzerland resulted in one-time income of EUR 18 million.
Overall, the half-year EBITDA excluding special items climbed from
EUR 31 million to EUR 53 million. EBIT excluding special items for
portfolio measures improved from EUR -7 million to EUR 19 million.
Special items amounting to EUR -18 million (previous year: EUR -1
million) essentially comprise non-recurring expenditure for
restructuring the Ludwigsburg site and closing the Leipzig site, and
proceeds from the sale to Müller Martini. The half-year financial
result was EUR -33 million (previous year EUR -28 million).
Accordingly, income before taxes improved from EUR -36 million to EUR
-32 million and the net result after taxes from EUR -47 million to
EUR -42 million.

"Portfolio management is influencing the profitability of this
financial year, with both positive and significantly negative non-
recurring effects, but the ultimate improvement will be a lasting
one," said Heidelberg CFO Dirk Kaliebe.

Despite the payments for the Focus efficiency program (EUR 20
million), the clearly positive free cash flow in the second quarter
(EUR 36 million) improved the half-yearly figure to EUR -30 million
(HY1-2013/2014: EUR 28 million). At EUR 272 million, the net
financial debt remains at a low level (end of financial year
2013/2014: EUR 238 million). Together with the improvements at
operating level, this enabled the leverage to be maintained at the
target level of 2. The equity ratio was 13.3 percent (end of
financial year 2013/2014: 16.0 percent).

"The company's low level of debt lays the foundation for continued
restructuring of the Group," stated Kaliebe.

As at September 30, 2014, the Heidelberg Group had a global
workforce of 12,393 plus 550 trainees (previous year: 13,001 plus 615
trainees).

Outlook: Restructuring of portfolio emphasizes target EBITDA
margin of at least 8 percent in financial year 2015/2016

Continued implementation of the portfolio optimization measures
initiated is the key factor determining the development of sales and
earnings for financial year 2014/2015 as a whole. The reorganization
of postpress is expected to lead to lower sales in this area in the
short term until implementation is complete. Additionally, we will
continue to actively reduce low-margin business. Based on this
situation, including the economic slowdown in China, overall sales in
financial year 2014/2015 are likely to be down around 5 percent
year-on-year.

The portfolio optimization measures initiated will have both a
boosting and a dampening impact on earnings during the current
financial year. Overall, the measures should further improve the
company's operating profitability and help Heidelberg get closer
still to its target of an operating margin of at least 8 percent in
terms of EBITDA.

Adjusted for these non-recurring effects for portfolio
optimizations and cost-cutting measures, the company's continued aim
is to achieve an increase in after-tax earnings.

For additional details about the company and image material,
please visit the Press Lounge of Heidelberger Druckmaschinen AG at
www.heidelberg.com.

The report on the first half-year of financial year 2014/2015 can
be accessed at www.heidelberg.com.

Next reporting date: The figures for the third quarter of
financial year 2014/2015 are due to be published on February 4, 2015.

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.

Pressekontakt:
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