Heidelberg Expecting Profitable Growth in FY 2021/2022
Given an improving order situation and the increasingly positive impact of the group’s extensive transformation, Heidelberger Druckmaschinen AG (Heidelberg) is confident of returning to profitable growth in financial year 2021/2022 (April 1, 2021 to March 31, 2022). Despite the continuing uncertainties regarding the duration and scope of the negative effects of the COVID-19 pandemic in financial year 2021/2022, the company is therefore expecting sales to climb from € 1,913 million (US$2,332 million) to at least € 2 billion (US$2.44 billion).
“The comprehensive transformation Heidelberg initiated before the coronavirus pandemic hit has made the company leaner and more efficient. Given that demand is now also definitely picking up again in most key sales regions, we’re expecting to achieve a far better operating margin this year, including a slightly positive net result after taxes. The considerable growth potential offered by packaging printing, digital business models, business in China, and new technologies such as wallboxes is also making us confident about the years ahead,” comments Heidelberg CEO Rainer Hundsdörfer.
The company predicts that profitability will grow even more strongly than sales. For example, the expected increase in sales, the lower cost base, and the fact that significant restructuring costs of some 5.0 percent (including restructuring result) will no longer need to be met means the EBITDA margin is set to increase to between 6 and 7 percent. After two years of losses, a positive net result after taxes is also likely to be achieved thanks to a sustained improvement in the financial result.
Expansion of growth areas
With solid economic development, this profitable upward trend looks set to continue in subsequent years, too. This is down to the company’s successful implementation of realignment measures, the focus on its profitable core business, and the expansion of growth areas. Cost savings totaling € 170 million are expected to have taken full effect in financial year 2022/2023 and the Group’s operating break-even point is likely to have decreased to around € 1.9 billion. Heidelberg sees considerable potential for sustained growth and increases in value in the future – above all for packaging printing, digital business models, business in China, and new technology applications. Heidelberg Wallbox sales, for instance, have helped more than double overall e-mobility revenue to over € 20 million and the company is working on a further massive expansion of its capacities in order to meet dynamic growth in demand. Despite the sums being invested in this expansion, its e-mobility business is already turning a profit.
“We’re delighted that all our efforts during the crisis in financial year 2020/2021 are now bearing fruit. Heidelberg is back on a solid financial footing, is fully focused, has become far more efficient, and is benefiting from excellent growth potential in various regions and areas of business,” emphasizes CFO Marcus A. Wassenberg.
Thanks to a strong final quarter, Heidelberg generated sales of some € 1,913 million in financial year 2020/2021, which was slightly above the range of € 1.85 billion to € 1.90 billion that had been adjusted in the third quarter of financial year 2020/2021. As already announced, the pandemic has resulted in the company failing by some margin to match the previous year’s figure (€ 2,349 million). Due to an uptick in demand – in particular in China, parts of Europe, and in the final quarter in the United States as well – incoming orders increased to around € 2 billion at the end of the financial year. In the fourth quarter alone, incoming orders improved very significantly, from € 462 million in the same quarter of the previous year to € 579 million. This increased the order backlog to € 636 million, which creates a good basis for the new financial year.
Thanks to the positive impact of the transformation program, EBITDA excluding restructuring result in financial year 2020/2021 stood at € 146 million, a clear improvement on the previous year (€ 102 million). At 7.6 percent, the EBITDA margin excluding restructuring result exceeded the company’s own forecast of around 7 percent and the previous year’s figure of 4.3 percent, even though the expected proceeds from the sale of land at the Wiesloch site will not be recorded until the new financial year. EBIT excluding restructuring result rose from € 6 million to € 69 million. The costs associated with transformation measures led to a restructuring result of € -51 million (previous year: € -275 million). The financial result also improved by € 11 million to € –41 million. Consequently, the previous year’s massively negative net result after taxes of € -343 million as a result of restructuring improved to € -43 million.
The preceding press release was provided by a company unaffiliated with In-plant Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of In-plant Impressions.