Heidelberg slightly exceeds own forecast for FY 2020-2021

Heidelberg shares spurt on DAX

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Heidelberg's share price over the past five years. Screenshot via Internet
Heidelberg's share price over the past five years. Screenshot via Internet

In a press release dated 27 April 2021, Heidelberg says according to preliminary figures (unaudited), it has exceeded its own forecast in terms of net sales and operating margin for the financial year 2020-2021 just ended (1 April 2020 to 31 March 2021). The final figures will be made public along with its annual report on 9 June 2021. However, on 28 April Heidelberg’s shares spurted in the day to € 1.47 and were hovering around € 1.42 in the late afternoon on the German DAX. This represents a recovery of sorts from the low share price of Heidelberg in the past financial year which sank to Euro .51 cents on 6 November 2020.

Thanks to a strong final quarter, sales of around € 1.913 billion were slightly above the forecast range of € 1.85 billion to € 1.90 billion. Due to rising demand particularly in China, parts of Europe, and, in the final quarter, also in the US, incoming orders rose to a high level of around € 2.0 billion by the end of the financial year. In the fourth quarter alone, the order intake improved significantly to € 579 million, from € 462 million in the same quarter of the previous year. The order backlog thus increased to a level of € 636 million, providing a favorable basis for the new financial year.

Heidelberg volumes recover in summer

With a strong final spurt, we have been able to continue our recovery in business volume since the Corona-induced low in the summer,” said Rainer Hundsdörfer, Heidelberg’s CEO. “The upturn in the regions makes us confident that we will be able to continue our upward trend in net sales and margin in the future.”

Heidelberg assembly line Photo Heidelberg
Heidelberg assembly line Photo Heidelberg

As a result of the positive effects realized under the transformation program and the higher sales volume in the final quarter, the operating return exceeded the company’s own forecast. At € 146 million, EBITDA excluding restructuring result in FY 2020-21 was significantly higher than in the previous year (€ 102 million). The EBITDA margin of around 7.6% exceeded the company’s own forecast of around 7%, even though the expected income from the sale of land at the Wiesloch site will only be recognized in the new financial year.

The consistent and rapid implementation of our transformation program has stabilized Heidelberg during the pandemic and, with the tailwind of the market recovery setting in, provides the foundation for profitable growth,” said Marcus A. Wassenberg, the company’s CFO.

According to the press release, as expected, the preliminary result after taxes in the financial year 2020/21 has improved significantly year-on-year. Due to the favorable final quarter, the loss is expected to be somewhat lower than previously anticipated. Thanks in particular to the sharp reduction in net working capital and income from asset management in the reporting period, free cash flow for the financial year as a whole will be clearly positive, and net financial debt will be kept at a low level.

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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