Heidelberg drives digital transformation - 20 contracts already signed for new subscription model

Heidelberg (ots) -

- Incoming orders up 6 percent to EUR1,306 million in first half-year
- Group sales also improve by 6 percent to EUR1,114 million
- Operating result (EBITDA) increases from EUR60 million to EUR62
million
- Still on course to achieve targets for financial year 2018/2019 as
a whole

Six months into financial year 2018/2019, the launch of the new
subscription model has led to further growth in incoming orders and
the order backlog at Heidelberger Druckmaschinen AG (Heidelberg). No
fewer than 20 subscription contracts covering the entire press life
cycle - including service, software, and consumables - have been
signed to date and demand for new machines remains healthy. As a
result, incoming orders for the half-year have climbed by around 6
percent, from EUR1,234 million to EUR1,306 million. This figure would
have been higher still had it not been for negative exchange rate
movements amounting to EUR17 million. The order backlog improved by
an impressive 23 percent, from EUR627 million to EUR774 million.
Sales of up to EUR100 million, in particular for services and
consumables, are expected over the standard five-year term of the
subscription contracts already signed, which represent an annual
sheet volume in the order of 1 billion pages.

"The subscription model offers huge potential. It's transforming
the market and also our company. We're continuing to drive the
digital transformation at Heidelberg," commented Heidelberg CEO
Rainer Hundsdörfer.

The implementation of the corporate strategy towards digitization
is progressing. Printers in Europe, the US and China are already
producing with high quality and productivity for their customers with
the new Primefire digital printing system. With the newly founded
Heidelberg Digital Unit, the e-commerce business will be rapidly
expanded. As part of a digital roadmap, IT will also focus even more
on efficient processes and the challenges of digital business models.

Half-year operating profit improves to EUR62 million

Despite negative exchange rate movements totaling EUR15 million,
Heidelberg increased its net sales by 6 percent to EUR1,114 million
(H1 2017/2018: EUR1,054 million) in the reporting period. EBITDA
excluding restructuring result for the half-year climbed from EUR60
million to EUR62 million, which meant the EBITDA margin remained the
same at 5.6 percent. EBIT excluding restructuring result matched the
previous year's solid level of EUR27 million despite additional staff
costs resulting from the new collective bargaining agreement. Planned
restructuring measures to improve efficiency generated higher
restructuring expenses of EUR5 million (H1 2017/2018: EUR1 million).
Furthermore, as already communicated, the partial repayment of EUR55
million of the existing high-yield bond, which was completed in
mid-July, resulted in non-recurring transaction and early redemption
charges. Consequently, the financial result after six months worsened
from EUR-24 million to EUR-28 million, but will benefit significantly
from lower interest payments in the future. The net result after
taxes (including income taxes) thus fell as expected, from break-even
to EUR-6 million.

This meant the operating cash flow of EUR27 million did not quite
match the previous year's level of EUR35 million. An increase in
inventories due to the growing order backlog and the start-up of
digital operations as well as investments in the construction of the
innovation center at the Wiesloch-Walldorf site were among the
factors influencing the free cash flow in the reporting period
(EUR-86 million compared with EUR-32 million in the previous year).
At EUR373 million, equity was substantially up on the level as at
March 31, 2018 (EUR341 million), and the equity ratio improved
accordingly, from 15 to 17 percent. Despite seasonal factors
resulting in a higher net financial debt of EUR320 million (previous
year: EUR259 million), the leverage of 1.8 as at September 30, 2018
was once again well below the target level of 2.

"As demonstrated in October with the acquisition of MBO, we're
investing in the company's digital transformation. This highlights
our strategic focus on consistently aligning our portfolio and new
business models with the growth segments of digital and packaging,"
said Heidelberg CFO Dirk Kaliebe.

Forecast for financial year as a whole unchanged - moderate growth
in net sales and net profit after taxes expected

Given the solid progress in the first six months, Heidelberg can
confirm the targets for financial year 2018/2019 as a whole. A
moderate increase in sales and ongoing efficiency improvements should
mean that, despite higher collectively agreed wages, the EBITDA
margin excluding restructuring result will lie between 7 and 7.5
percent. Taking into account anticipated restructuring costs in the
order of EUR20 million, non-recurring expenses from the partial
repayment of the corporate bond, and rising tax costs at foreign
subsidiaries, a moderate increase in the net result after taxes is
forecast compared with the previous year (including a non-recurring
tax effect in financial year 2017/2018).

Subscription model significantly increases order backlog - growing
impact on net sales and result in years to come

It is expected that 30 contracts for the new subscription model
will be concluded during financial year 2018/2019 as a whole, which
will mean a further increase in the order backlog. Given the
continued high level of interest from international customers, the
number of contracts is set to climb to around 100 in the coming
financial year. The new business model will only make a relatively
small contribution to sales and the result at the start, but this
will grow substantially in the medium term.

Image material, the interim report for the first half of financial
year 2018/2019, 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 new innovation center at the Wiesloch-Walldorf site will be
officially opened on December 13, 2018.

The scheduled publication date for the financial statements for
the third quarter of 2018/2019 is February 7, 2019.

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