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Heidelberg Predicts Difficult Market Conditions and Adopts Comprehensive Package of Measures to Enhance the Cost Structure

Preliminary results for the first quarter
The difficult underlying conditions have also affected the preliminary results for the first quarter of the 2008/2009 financial year (April 1 to June 30). Preliminary sales achieved by Heidelberg in the first quarter amounted to between 640 and 660 million Euro (previous year: 742 million Euro). As already announced, the fall-off in sales compared to the previous year coupled with higher costs will produce a negative quarterly result for Heidelberg. Based on preliminary calculations, the operating result will be minus 35 to minus 40 million Euro. Due to the purchase of Hi-Tech Coatings, the cost of drupa and lower sales, the free cash flow will be clearly below the previous year\\\'s level at minus 200 to minus 220 million Euro (previous year: minus 81 million Euro).

Incoming orders received at drupa exceed expectations
The news on preliminary incoming orders for the first quarter is more positive. Heidelberg received orders amounting to between 1.1 and 1.15 billion Euro (previous year: 934 million Euro). This is satisfactory in the context of the leading industry trade show drupa, which made a major contribution to this good order intake. Heidelberg successfully established itself on the packaging printing market and as a full-service provider, including consumables, at drupa. There was also a huge amount of interest in the launch of the new very large format. Most of the contracts concluded at the trade show will be reflected in the sales figures for the second and third quarters.

Based on the orders placed at drupa, Heidelberg predicts that sales and the results for the second and third quarters of 2008/2009 will be up on the first quarter.

For the 2008/2009 financial year as a whole the company does not expect to match the previous year\\\'s sales and operating result.

Due to the uncertain economic situation worldwide and the volatile market environment, it will not be possible to provide a reliable forecast of the key figures for the 2008/2009 financial year as a whole until later in the year. This outlook will be published no later than with the half-yearly results at the beginning of November

Comprehensive package of measures with four key components
The Management Board confirms the growth strategy that has been embarked upon, which focuses on packaging printing and services for the print media industry. Any reduction in manufacturing capacity over the coming months will not extend beyond the flexibility agreements entered into.

In order to counter rising costs, the Heidelberg Management Board has prepared a comprehensive package of cost-cutting measures to be implemented with immediate effect. The package\\\'s four main focal points are reducing R&D expenditures, restructuring postpress packaging activities, significantly increasing the proportion of purchases made outside the euro zone, strengthening international production sites, and achieving a substantial reduction in structural costs.

Overall, these measures are intended to result in savings of around 100 million Euro by financial year 2010/2011. The aim is to achieve a large proportion of this - 75 million Euro - within the next 18 months. This package of measures will initially increase costs to the tune of a further about 70 million Euro in the current financial year 2008/2009 and another 30 million Euro until financial year 2010/2011.

\"In addition to the drupa trade show, which can be deemed satisfactory overall, we have also been putting a great deal of work into our medium- to long-term strategy. This has made it clear that the all in all increasing costs call for a further significant adjustment to our cost structures. The package of measures adopted takes into account all key areas,\\\" says Heidelberg CEO Bernhard Schreier, stressing the urgency of the measures.

Reducing R&D expenditure
Heidelberg will be making immediate changes to its R&D strategy. Improving efficiency and pooling development activities should result in short term savings of at least 25 million Euro. This will lower R&D expenditures from their current level by a good ten percent. Consolidating R&D locations will also help cut costs. In the medium term, R&D expenditures are to be cut to less than five percent of total sales.

Restructuring postpress packaging activities
Over the next three years, Heidelberg will be restructuring its postpress packaging business. In the entire Postpress sector the operating result is to be increased by 20 million Euro until 2010/2011. This is to be achieved by consolidating production capacities, transferring certain operations to Slovakia, and restructuring R&D activities within this product area. The packaging market segment - and expanding services and consumables activities - still represents a growth driver on a struggling market. Unlocking this potential should further reduce the cyclicity of the Heidelberg business model while also boosting sales and results.

Increasing purchasing and production outside the euro zone
Intensifying purchasing activities outside the euro zone and expanding production in other countries will have positive effects. Overall, the purchasing volume outside the euro area is to be increased from the current level of around 40 million Euro to almost 200 million Euro in financial year 2010/2011. Heidelberg will also continue to push ahead with production in other countries. The plants in China and Slovakia are to be expanded, and it is also intended to transfer production of a small-format press to the site in the U.S., which has the largest sales market for this product. Overall, these measures will result in cost savings of around 15 million Euro.

Lowering structural costs
In addition, Heidelberg is planning to cut structural costs. Over the next 24 months, the company intends to save indirect costs of 40 million Euro, around ten million Euro of this in the current financial year.

The entire package of cost-cutting measures will also impact on the Heidelberg Group\'s workforce. Honoring the agreement on safeguarding the future, which runs until 2012, and subject to meetings with employee representatives, around 500 jobs are to be shed worldwide by the end of financial year 2010/2011. As of March 31, 2008, the Heidelberg Group employed 19,596 staff worldwide.

Additional details on the company can be found at www.heidelberg.com.

Pathways to green publishing seminar in Delhi

Although some of the presentations were product presentations the first session itself took up the issue of sustainability – that it is no longer enough to be environment friendly but that there has to be an approach that looks at the product and the processes from cradle to regeneration including the water, transport, and energy costs of both materials and end products. This has to be measurable in the form of a bottom line scorecard – the carbon footprint.

In this session R Srinivasan pointed out that ITC PSPD’s mills with their social forestry and biotechnology activity including the cloning and distribution of plants are in the business of regeneration of raw material that also earns them carbon credits. They are intensely aware of their of their carbon footprint and the need to be carbon neutral. Harsh Pati Singhania of JK Paper said that the issue for paper makers is of access to raw materials and forests since it affects the scale of operations that are needed to make processes productive and energy saving.

As a representative of the paper industry he spoke of the high capital costs and the low return on investment in an industry where the national forest policy is less than encouraging in enabling either large-scale social or industrial forestry. This may not have been the forum to sort out one of the most issues that confronts the paper, publishing, and printing industry – the sustainability of paper manufactured in India.

There were comments from manufacturers in the audience using alternative raw material – bagasse (sugarcane husk or residue) – but it is well known that even this type of fibre input is primarily used in our country as fuel to generate energy.

The other input providers Heidelberg and HP spoke on the one hand of the refinement of offset printing and on the other of using digital printing to print only as much as is needed at a given time. Both of these are technology solutions and real parts of the solution that printers and even publishers are contemplating every day but from the publisher’s point of view there is a great concern about the cost of printing.

Sanat Hazra the newspaper printer returned from America made a presentation that showed how environmental protocols are practised in the west and also that they can be implemented in our country by looking at the materials, processes and end products including recyclable and hazardous wastes. As pointed out by JK Dadoo of the Delhi Administration these practices are far away from what is happening in the industrial units of Delhi. The capital cost of effluent treatment plants is not as daunting as the cost of using and maintaining them. He pointed out that in the 34 industrial estates of the city there are only 11 common effluent plants.

We look forward to this effort by TERI and the Delhi Administration developing into understanding, activities, action plans and then seminars to discuss both the successes and failures. The idea of a green publishers guild put forward by the TERI Press is a good idea and as another participant commented we also look forward to seeing its aims and objectives outlined. As far as the printers of Delhi this is another chance to get serious. They just need to learn about and frame an environmental audit protocol. They need to start by studying their business and their processes -- to measure and document them. This will lead to solutions that can be followed voluntarily and demonstrably, although one cannot imagine them acting without government threats. Gone are the days that they can continue in their illiterate ways.

 

The Business Daily boom in the country

A year ago there were six national newspapers or regional dailies in the English langauge business space, including Mint, published by HT Media Ltd, The Economic Times, published by BCCL, the Business Standard, Hindu Business Line from Kasturi and Sons, Financial Express from the Express Mumbai group, and DNA Money from the DNA joint venture of Zee Television and the Dainik Bhaskar group.

Since then, in the Hindi market segment, Economic Ttimes launched its daily on 19 February 2008 and currently has seven Hindi editions. Business standard launched their Hindi daily three days earlier on 16 February 2008. Both publications also have Gujarati editions. Amar Ujala had started a business daily Karobaar in 1994 and discontinued it in 1999. It will enter the market again with a business daily by the end of this year. The Dainik Jagran group and Network 18 have come together to launch a business daily in Hindi and Gujarati. The combined circulation of these vernacular is approximately Rs.13 lakhs (Rs.1.3 million) with a combined ad revenue of Rs.800 crore.

Dainik Jagran, Dainik Bhaskar, Amar Ujala, Deccan Chronicle, Financial Times
Upbeat trend in vernacular business dailies

Survey’s show only 0.4 per cent of the country’s population reads business papers of any kind. According to the Indian Readership Survey (a survey on readership carried out buy Media Readers Users Council, a not-for-profit entity that has representatives from advertisers, advertising agencies and media companies), 38 per cent of the population reads at least one daily news publication.

The advertising revenue generated by the financial dailies and magazines is about Rs.800 crore (US$ 200 million). The financial press reports that The Economic Times generates about Rs.600-crore of advertising revenue currently. The balance Rs.200 crore is apparently distributed between Business Standard, Hindu Business Line, The Financial Express, DNA Money, Mint and the numerous financial magazines and periodicals. Again, launching a business daily is not easy, say experts. It costs roughly Rs.12 to 20 to bring out a copy of a newspaper. If the circulation is one lakh (100,000) copies, the investment works out to about Rs.12 lakh per day. There is still apprehension as to whether the market can accommodate all the papers.

T Ninan the founder-editor and publisher of Business Standard writing about the prospect of financial dailies in Indian languages editorialized on the day of his paper Hindi launch,, “Our market research has revealed a hunger for news on the stock market, on companies and brands, on technological developments and consumer finance, on prices and interest rates. The survey findings reflect a more upbeat mood than many people might have assumed, a desire to grab opportunities, and a strong wish to be better informed on economic issues. It is now getting on to nearly six decades since the first English-language business newspaper was born.

It took about three decades after that for the first of these business newspapers to register paid circulation of a hundred thousand copies. In contrast, it goes almost without saying that the Hindi business newspapers will start off more confidently, with large circulation numbers from the very beginning. There will not be advertising to match, at least initially, but that may change because the marketing world too has woken up to the importance of the heartland. For all one knows, Hindi business readership might overtake English readership in the coming years, just as it has done when it comes to the general newspapers”.

Stork’s intermittent rotary screen module for variable print-lengths

A special feature of the unit is Stork’s patented intermittent-contact squeegee system. This eliminates the problem of mesh-stretching, by only applying downward pressure against the screen, while the mesh makes contact with the substrate. When the screen assumes the off-contact position, the squeegee pressure is immediately disengaged.

Intermittent printing systems enable substantial savings in tooling costs and changeover time. Between impressions, the web realigns itself, by making an intermittent web movement, which is adjustable according to the repeat length. In this way, a single screen or cylinder size can be used for many different print jobs.

The unit features Stork’s patented squeegee system, which eliminates the problem of screen wear-and-tear. Bert Grootjen, program manager graphics at Stork Prints, comments: “The unit has proved so popular because it gives label converters the chance to compete successfully in short-run, high-end markets, while enjoying low consumable costs at the same time.”

Rotary screen printing is seen as a highly productive means of applying thick ink and varnish deposits. As a result, the process is ideal for high-end features that offer extra shelf impact, like high-lustre varnishes, tactile and raised image effects, brilliant opaques, the no-label look, thermo-chromic inks, and a range of brand-protecting security solutions, such as iridescent inks.

Konica Minolta showcases high-end digital presses

Konica Minolta showcases high-end digital presses

Konica Minolta demonstrated its high-end printing solutions including bizhub PRESS C1100/ C1085; bizhub PRESS C1070/C1060; bizhub PRESS 1250 and MGI JETvarnish 3DS at PrintPack India exhibition at India Expo Centre, Greater Noida.