Heidelberg claims restructuring overcoming Covid-19

Improved sales, incoming orders, and EBITDA in Q2

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Rainer Hundsdorfer, chief executive officer, Heidelberg
Rainer Hundsdorfer, chief executive officer, Heidelberg

In its press release dated 10 November 2020, Heidelberg Druckmaschinen says that by systematically and swiftly implementing its transformation, it has further strengthened its position in the first half of the 2020/2021 financial year (1 April to 30 September 2020). With several measures adopted as part of the transformation program launched this March to boost profitability, enhance competitiveness, and secure the company’s future, Heidelberg says it has been able to more than compensate for the negative effect on earnings caused by a significant drop in sales due to the Covid-19 pandemic.

Heidelberg has again achieved a positive EBITDA, excluding restructuring results in the second quarter of the current financial year, recording €97 million in the first six months – a significant increase from the previous year (€69 million). The EBITDA margin for the half-year was 12%, compared with 6.2% in the same period of the last year. Simultaneously, the net financial debt was successfully reduced from €416 million in the previous year to €157 million.

Improvement in Q2, especially in China

In terms of sales and incoming orders, the gap compared to the previous year shrank in the second quarter of the current financial year. While sales after the first quarter were at –34%, this figure was only –24% from July to September; incoming orders, meanwhile, improved from –44% to –20%. There was a positive development in demand in some markets, above all in China’s critical single market, where, compared with the previous year, the level of incoming orders increased from around –50% in the first quarter to about –8% in the second. This trend and the planned additional steps to optimize the company’s assets and portfolio and reduce staff costs provide a reason to be optimistic that Heidelberg will reach its announced targets in the year as a whole and continue to achieve sustainable, profitable growth in the years that follow.

“Our transformation is proving successful. We are delivering on our promise. By the end of the half-year, we had drastically reduced our debt. We made significant improvements regarding our liquidity and results – despite the huge challenges our organization has faced owing to the Covid-19 pandemic. Besides enhancing our financial stability, we are strategically positioning ourselves to meet our customers’ needs with an innovative, needs-based product and service portfolio, with our aim being to boost incoming orders and sales further. We will continue to benefit from this when the markets recover, as demonstrated by China,” says Rainer Hundsdörfer, CEO of Heidelberg.

Readers will recall that the Heidelberg systemic plan includes the early repayment of corporate bonds, which was done on 9 September 2020. The early repayment of this debt reduced its interest payments by €12 million annually. The sale of the Gallus division to Swiss company benpac should also bring Heidelberg another €120 million by the end of the year.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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