Heidelberg with a solid start to the new financial year - order backlog growing thanks to subscription model

Heidelberg (ots) -

- Incoming orders in the first quarter up by 6 percent to EUR665
million

- Group sales increased by 9 percent to EUR541 million

- Operating result (EBITDA) up from EUR14 million to EUR20
million - EBIT positive at EUR2 million

- On course to achieve overall annual targets for 2018/2019

- Digital transformation well underway, medium-term targets firmly
in sight

Heidelberger Druckmaschinen AG (Heidelberg) has started off the
2018/2019 financial year with growth in net sales and result. High
demand for the newly established subscription model and the launch of
series production of the Primefire digital press are demonstrating
the potential the digital transformation offers the company. Incoming
orders, for example, improved in the first quarter (April 1 to June
30) by 6 percent to EUR665 million. Furthermore, the previous year's
figure of EUR629 million benefited from the Print China trade show.
The order backlog grew by 18 percent to EUR714 million (previous
year: EUR603 million), partly due to subscription contracts,
particularly in terms of life cycle business, i.e. services and
consumables.

The first quarter brought in the first revenues raised from
subscription contracts, which generate recurrent sales over a term
that usually lasts five years. However, Heidelberg also recorded
growth in traditional business during the first quarter, with sales
rising by 9 percent in total to EUR541 million, despite negative
currency effects. Had exchange rates remained similar, revenues would
have risen by around 11 percent.

"The strong customer demand for our new subscription portfolio and
digital packaging printing presses has exceeded our expectations.
Heidelberg is driving digitization in the entire industry. The
establishment of the new business models is proceeding to plan and
will at first make a relatively modest contribution to net sales and
result, albeit one that will increase significantly in the medium
term," commented Rainer Hundsdörfer, CEO of Heidelberg.

Operating profit at the start of the year

At EUR20 million, EBITDA excluding the restructuring result was
higher than the same quarter of the previous year (EUR14 million),
bringing the EBITDA margin up from 2.8 percent to 3.7 percent.
Despite the additional staff costs associated with the new collective
wage agreement, EBIT excluding the restructuring result was positive
in this quarter, which traditionally records the weakest sales, at
EUR2 million (previous year: EUR-3 million). As previously announced,
the company is continuing to work on reducing financing costs to less
than EUR20 million in the medium term. As part of this process, a
partial repayment of the existing corporate bond in the amount of
EUR55 million was effected in mid-July. The associated non-recurring
transaction and early redemption fees reduced the financial result in
the quarter under review from EUR-13 million to EUR-16 million,
although lower future interest payments will have a noticeable
beneficial impact. After factoring in income taxes, the net result
after taxes at EUR-15 million was slightly better than in the
previous year (EUR-16 million).

At EUR3 million, operating cash flow was on a par with the same
quarter in the previous year (EUR1 million). Free cash flow of EUR-45
million in the quarter under review (previous year: EUR-13 million)
can be attributed to a build-up in inventories due to the growing
order backlog, investments in building the innovation center at the
Wiesloch-Walldorf site and a non-recurring increase in leasing
payments for buildings. At EUR332 million, equity was at the same
level as on the annual reporting date of March 31, 2018. The equity
ratio was unchanged at around 15 percent. Despite the higher net
financial debt, which is typical for the season and amounted to
EUR278 million on June 30, 2018 (previous year: EUR234 million),
leverage was 1.4, meaning it is still well below the target value of
2.

"Our financing structure is very solid. We have low leverage and
are maintaining liquidity reserves we can use to finance our planned
investments in new business models and the company's digital
transformation," said Heidelberg CFO Dirk Kaliebe.

Outlook unchanged: Moderate growth in sales and net profit after
taxes anticipated for 2018/2019 financial year

Given the good start to the year, Heidelberg is confirming its
overall targets for 2018/2019. Consequently, it is still forecasting
a moderate growth in sales. Due to this, and thanks to continued
efficiency improvements, the EBITDA margin excluding the
restructuring result is likely to lie in the range of 7 to 7.5
percent, despite higher collectively agreed wages. Restructuring
costs should be in the region of EUR20 million. The non-recurring
expenditure associated with the partial repayment of the corporate
bond is having a detrimental impact on the financial result. Due to
this, and in view of rising tax expenditure among foreign group
subsidiaries, a moderate overall increase in the net result after
taxes compared to the previous year (including the non-recurring tax
effect for 2017/2018) is being forecast.

Subscription model to play an ever-greater part in increasing net
sales and result

The strong demand for the new subscription model is undiminished
and has produced additional contracts in the quarter under review.
Numerous contracts are also in the pipeline at present. Given the
high level of interest international customers are showing in the
pay-per-use model that Heidelberg alone offers in the sector, the
target of a good 30 contracts for the current financial year is seen
as very realistic. This is equivalent to potential sales of
approximately EUR150 million over the contract period. The aim is to
conclude at least 250 contracts by 2022.

On the whole, Heidelberg is on course to achieve its targets for
2018/2019, although these new business achievements will have a
limited impact as they are still in their early stages. This strong
demand validates the Management Board's medium-term targets for the
period leading up to 2022, which are to see Group sales increase by
EUR500 million to around EUR3 billion, EBITDA go up to EUR250 - 300
million and net profit after taxes rise to at least EUR100 million.

Image material, the interim report for the first quarter of the
2018/2019 financial year, 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

Other dates:

The scheduled publication date for the financial statements for
the second quarter of 2018/2019 is November 8, 2018.

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 Aktien-gesellschaft 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.

Further information:

Heidelberger Druckmaschinen AG

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

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