Heidelberg divests land at Wiesloch/Walldorf to developer

Heidelberg further improves liquidity for strategic investments

Partial view of the extensive Heidelberg Wiesloch/Walldorf site Photo Heidelberg
Partial view of the extensive Heidelberg Wiesloch/Walldorf site Photo Heidelberg

Heidelberg (Heidelberger Druckmaschinen AG) has reached a further milestone in its planned site and structural optimization measures. The sale of an area of around 130,000 square meters to the VGP Group will create a new, modern industrial and commercial park at the Wiesloch/Walldorf site. Most pilgrims know, but the Heidelberg Wiesloch factory is about 17.3 kilometers from the perhaps extravagant Heidelberg Print Media Academy glass and steel building, which is across the plaza in front of the Heidelberg central train station.

It seems from the press release dated 23 December 2020 that the sale of the 130,000 square meters is only the first past of the company’s real estate divestment. Heidelberg’s Wiesloch/Walldorf site covers a total area of around 840,000 square meters. Of this, about 270,000 square meters are ‘to be newly marketed in the course of the planned site and structure optimization.’ At present, almost 5,000 employees work at the Heidelberg Wiesloch/Walldorf site.

A corresponding purchase agreement was signed on 23 December 2020 with VGP, a family-run European developer, operator, and owner of high-quality logistics and commercial properties. The company has a fully integrated business model and many years of experience along the entire value chain, from land acquisition and development to asset and property management. Heidelberg achieves a purchase price in the mid-double-digit million-euro range on this deal.

“By using space more efficiently, we will save considerable costs at Heidelberg in the future. In addition, we will use the funds this frees up to strengthen our liquidity in times of the Covid-19 pandemic and to press ahead with strategic investments for the future on the path of our digital transformation,” said Rainer Hundsdörfer, CEO of Heidelberg. “In VGP, we have found an experienced real estate developer as a partner who will market the space at the Wiesloch/Walldorf site in a future-proof manner in close coordination with the municipalities and Heidelberg.”

Jan van Geet, chairman of the Management Board of VGP, is also very pleased about the acquisition of the site, “We are very pleased that we have succeeded in acquiring this unique site. In close and trusting cooperation with the seller Heidelberger Druckmaschinen AG, the municipalities, and the city of Heidelberg, we were able to realize the acquisition very quickly. We plan to realign the site strategically and develop a modern industrial and commercial park here for long-term tenants from a variety of sectors. In this way, we want to make a sustainable contribution to the creation of new jobs and the economic development of the region.” Van Geet adds, “Sustainability and energy efficiency are key parameters for the properties developed by VGP. These aspects will also play a central role in developing the VGP Park in Wiesloch/Walldorf.”

The VGP Group currently operates 31 parks in Germany. In Europe, the family-owned company based in Antwerp, Belgium, now operates 76 parks in twelve countries. The partnership with VGP is the first step in this project.

Heidelberg’s restructuring plan gathers pace – our view

Heidelberg’s restructuring plan was never easy, even before the Covid-19 pandemic, because sheetfed offset sales are not nearly commensurate with the three prominent German and two leading Japanese manufacturers’ capacity in total. As we reported in our article on all five manufacturers’ viability, Heidelberg had 11,437 employees in Q3 of FY 2019-20. Although its turnover was much higher than the other manufacturers, this level of human resource seems unsustainable.

However, the company has made enormous strides in restructuring this year. Each of these public steps has been reported by us. These steps include the divestment of Gallus to a Swiss group, the divestment of its chemicals business, stopping the development of its B1 inkjet press, the building of a new plant in cooperation and joint venture with its anchor investor MasterWork in Tianjin in China, and the early payback of some of its debt.

Rainer Hundsdörfer, the CEO of Heidelberg, keeps talking about the company’s restructuring plan and its liquidity, which means that he wants to trim the debt and streamline the company. Every indication, including Heidelberg openly talking about China as its biggest market and its expansion in terms of capacity and technology, seems to be a significant part of this challenging restructuring plan. As an industry observer, one can only say Hundsdörfer appears to have the guts and understanding required. One hopes that he can restore the company to health even as his closest four competitors are also feeling the pain that the pandemic has only brought closer and into sharper relief.

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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