Heidelberg on track to meet medium-term targets - aiming for growth in 2018/2019

Heidelberg (ots) -

Significant progress with digital transformation thanks to
- successful launch of subscription model,
- start of series production for digital presses,
- expansion of consumables and e-commerce business, and
- ramp-up of Digital Platforms

Solid development in 2017/2018 underlines specified targets

Outlook - positive effects of new strategy expected to become
increasingly clear:
- moderate growth in sales and net result after taxes
- expected in financial year 2018/2019

Medium-term targets confirmed:
- Group sales set to increase to around EUR3 billion and
- net result after taxes to > EUR100 million

Heidelberger Druckmaschinen AG (Heidelberg) made significant
progress with the Group's targeted digital transformation in
financial year 2017/2018 (April 1, 2017 to March 31, 2018). By the
beginning of June, several customers had already opted for the new
subscription model that offers Heidelberg products and services as
part of a usage-based all-in contract running over several years. The
total of over 30 contracts being targeted for the new financial year
2018/2019 looks set to generate business worth some EUR150 million
over the standard five-year term of these models. However, as the
number of contracts concluded is just starting to pick up, this will
only be reflected in the company's figures to any significant extent
from financial year 2019/2020 onward, when it will also help
stabilize Group sales.

In addition, the series production of digital presses for
packaging and label printing (Primefire and Labelfire), which also
started in financial year 2017/2018, will have an increasingly
positive impact on sales. The aim for the coming years is to deliver
at least one digital press per month to customers. As the number of
systems installed increases, stable, recurring sales of consumables
will also continue growing and exceed machine-only business. Further
positive impetus is anticipated from additional sales of consumables,
increased levels of e-commerce business thanks primarily to our newly
founded Heidelberg Digital Unit, and the ramp-up of Digital
Platforms.

The recently agreed sale of the research and development building
in Heidelberg marks the successful conclusion of the planned
infrastructure projects at the Heidelberg and Wiesloch-Walldorf
sites. Another important step as part of efforts to improve
operational performance - among other things by reducing process and
structural costs under the "Operational Excellence" initiative - has
thus been completed.

Heidelberg can thus confirm the medium-term targets communicated
in the summer of 2017. These include an increase in Group sales to
around EUR3 billion, an operating result (EBITDA) of EUR250 to 300
million, and a net result after taxes of over EUR100 million.

"As announced at the last Annual Accounts Press Conference,
Heidelberg is well on the way to achieving its goal of once again
becoming the lighthouse of the industry. Our digital transformation
will continue systematically in financial year 2018/2019. Both our
new subscription model and the new digital presses remain in high
demand. Given that this will have a substantial impact on our sales
and result from 2019/2020 onward, we can confirm our medium-term
targets," commented CEO Rainer Hundsdörfer.

Presentation of annual financial statements for 2017/2018
underlines specified targets

Based on the audited figures from the annual financial statements,
Heidelberg has achieved the targets it set itself with Group sales of
EUR2,420 million. The difference compared with the previous year's
figure of EUR2,524 million is mainly the result of negative currency
effects and the deliberate avoidance of risky remarketed equipment
business amounting in total to over EUR100 million. Despite the
negative currency effects in the period under review, incoming orders
were at a very encouraging level for a post-drupa year at EUR2,588
million (previous year: EUR2,593 million). The demand in the final
quarter of the year was substantially up on the figure for the same
quarter of the previous year - EUR676 million compared with EUR604
million - among other things due to the full order volume of
subscription contracts now being taken into account. This contributed
to a significant increase in the order backlog at the end of the
financial year and also to a visible improvement in sales in the
first quarter compared with the previous year.

EBITDA excluding the effects of restructuring totaled EUR172
million in the reporting period (previous year: EUR179 million). This
meant the resulting EBITDA margin of 7.1 percent (previous year: 7.1
percent) was within the expected range. At around EUR-16 million, the
effects of restructuring in financial year 2017/2018 were similar to
the previous year's level of EUR-18 million. Lower interest costs
resulted in a further significant improvement in the financial result
to EUR-48 million (previous year: EUR-56 million). The pre-tax result
increased to EUR 39 million in the reporting year (previous year: EUR
34 million). Driven by the US tax reform, the net result after taxes
was negatively impacted by deferred tax expenses of some EUR 25
million reported by the US tax group. The non-cash write-down of
deferred tax assets reflects the cut in the US federal corporate
income tax. The net result after taxes was therefore EUR 14 million
in the financial year 2017/2018 after EUR 36 million in the previous
year. Adjusted for this effect, the net result after taxes would have
risen moderately as forecast.

Cash flow was clearly positive and on a par with the previous
year's level at EUR 104 million. Due to acquisitions and investments
associated with the construction of the new innovation center in
Wiesloch, as expected, the free cash flow was slightly negative at
EUR-8 million (previous year: EUR24 million). The net financial debt
fell to EUR236 million in the reporting period (March 31, 2017:
EUR252 million) and leverage at 1.4 remained well below the target
value of 2.

"Our growth initiatives are accompanied by a new financing
framework that also enables us to further accelerate the digital
transformation through targeted acquisitions," said CFO Dirk Kaliebe.
"In the future, too, we will make a point of leveraging the resulting
growth potential with acquisitions throughout the entire value-added
chain," he added.

Outlook: moderate growth in sales and net result after taxes
expected in financial year 2018/2019

Based on the progress in the targeted digital transformation, the
Company is forecasting moderate sales growth for 2018/2019. The solid
order backlog at the beginning of the financial year supports this
forecast. The first half of the year is again expected to be impacted
by negative currency effects, first and foremost on account of the US
dollar/euro exchange rate and out of Asia as well. As in previous
years, Heidelberg is currently intensively examining several options
for external growth, but the probability of such transactions cannot
be reliably quantified at this time.

The moderate growth in sales, combined with efficiency enhancement
measures, including initial savings from the recently initiated
operational excellence program, should allow an EBITDA margin
excluding restructuring result in the range of 7 to 7.5 percent in
the 2018/2019 financial year. The additional staff costs resulting
from the new collective bargaining agreement have been taken into
account.

As a result of the forthcoming transformation activities and the
optimization of processes and structures in the context of
operational excellence, Heidelberg is assuming restructuring expenses
of around EUR 20 million in the new financial year.

Interest expenses are to be reduced to around EUR 20 million in
the medium term as a result of the ongoing optimization of our credit
facilities. However, the anticipated positive effects will initially
be outweighed by the negative impact of the planned early partial
repayment of the existing high-yield bond (8 percent) in 2018/2019.
However, this move will reduce interest expenses in subsequent years.

In the financial year 2018/2019, while Heidelberg is also
forecasting higher tax expenses at foreign Group subsidiaries, the
company still expects a moderate increase in earnings after taxes
compared to the previous year (including a non-recurring tax effect
in 2017/2018), which is set to rise further in subsequent years.

Image material, the Annual Report for financial year 2017/18, 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

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.

Vorsitzender des Aufsichtsrats: Dr. Siegfried Jaschinski ·
Vorstand: Rainer Hundsdörfer, Vorsitzender · Dr. Ulrich Hermann ·
Dirk Kaliebe · Stephan Plenz Sitz der Gesellschaft: Heidelberg ·
Amtsgericht Mannheim - Registergericht - HRB 330004 · Ust.-IdNr. DE
143455661 Commerzbank AG Heidelberg IBAN: DE32 6724 0039 0192 2640 01
BIC: COBADEFF672 · Deutsche Bank AG Heidelberg IBAN: DE22 6727 0003
0029 8000 01 BIC: DEUTDESM672

Further information:
Heidelberger Druckmaschinen AG

Corporate Public Relations
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

Original-Content von: Heidelberger Druckmaschinen AG, übermittelt durch news aktuell