Heidelberg increases operating profitability in Q3

Hundsdorfer leaves a viable legacy

Heidelberg increases operating profitability in Q3
Rainer Hundsdorfer, outgoing chief executive officer, Heidelberg

Heidelberg reports that in the third quarter of the financial year 2021/2022 (1 October to 31 December 2021), its order situation still recovered further. It is not clear how much this recovery is from the pent-up demand of previous quarters. Although the company is expecting to return to profit in the financial year ending in March 2022 it may take several quarters to understand the real state of the company and the industry.

The results are an endorsement of the bold steps by outgoing chief executive officer Rainer Hundsdorfer who among other things, completed the recovery initiated by Gerald Linzbach and dared to stop the R&D on the B1 digital press project which was begun during Linzbach’s tenure. Hundsdorfer also tried unsuccessfully to sell Gallus but was able to divest several bits and pieces including land in his firm bid to make the company viable. Hundsdorfer’s commitment to the company’s expansion in China is also a significant realization and reality check on a company that often gets carried away by its pride in ‘German metallurgy and engineering.’ Innovations such as the subscription model are slowly growing but the jury is still out on this in markets such as India. Overall his reduction of the company’s debt to just Euro 6 million seems remarkable to longtime observers who have seen the company struggle to streamline itself.

In any case, according to the company’s press release, the group’s transformation project has led to a clear improvement in its operating result, with incoming orders in the third quarter increasing by 16% to Euro 643 million. For the nine-month period, the figure is Euro 1,888 million, which is 33% higher than in the previous year. The higher-order backlog of Euro 951 million at the end of the quarter even exceeded the pre-pandemic level. 

Sales were also up on the previous year – by 20% at Euro 582 million for the third quarter and by 21% at Euro 1,565 million for the nine-month period. EBITDA rose significantly in the third quarter, by 36% to Euro 57 million. EBITDA after nine months amounted to Euro 132 million, which is 21% higher than in the previous year. The operating improvement was primarily due to an increased business volume and better margins as a result of the transformation according to the company. While the availability of parts is creating challenges across the industry, Heidelberg says it has largely managed to overcome these by approving alternative components and coordinating closely with suppliers.

Besides the substantial operating improvements, earnings from the sale of docufy (around Euro 22 million) and a property in the UK (Euro 26 million) provided a further boost during the current reporting period. EBIT after three quarters totaled Euro 74 million (previous year –  Euro 50 million). Thanks to the higher EBIT and the very significant improvement in the financial result, from Euro –35 million to Euro –24 million, the net result before taxes increased from Euro 15 million to Euro 50 million. After taxes, Heidelberg recorded a profit of Euro 40 million after nine months, following a figure of Euro 3 million in the previous year.

“The success of our efforts to transform Heidelberg is becoming ever clearer. Our core business is doing well thanks to our high level of innovation and our focus on customer benefits, and our digital business models are making a key contribution, too. What’s more, the dynamic growth in demand for electromobility solutions continues unabated. In this sector, we are systematically pressing ahead with our expansion outside Germany and, in the future, we will continue the strategic development of our business model through acquisitions and collaborations. Overall, we are well-positioned for the future. Moreover, the healthy order backlog creates a sound basis as we look toward the start of the financial year 2022/2023,” comments Rainer Hundsdörfer, outgoing chief executive officer of Heidelberg to be succeeded on 1 April 2022 by Dr Ludwin Monz.

Key strategic focus on growth areas

The press release states, that for the years ahead, Heidelberg has systematically geared the group toward profitable growth in the areas of packaging printing and digital business models, in China, and also in new technology applications – especially electromobility and printed electronics. Further milestones in this growth strategy were achieved during the third quarter. The strategic partnership with the Munich Reinsurance group that was announced in early November provides a platform for the international expansion of the digital usage-based subscription business. The subscription model offers customers a press, service, and consumables package for a usage fee based on the print output.

Low net financial debt and improved equity ratio

Influenced by the improved result, and also by positive effects from the net working capital and the sale of assets, the company’s free cash flow on 31 December 2021 was Euro 69 million (previous year – Euro 10 million). The positive free cash flow and the further repayment of financial liabilities led to a net financial debt after nine months of just Euro 6 million (31 March 2021- Euro 67 million). Leverage was therefore at zero (corresponding quarter of the previous year – –1.2). Boosted by the positive net result after taxes, the Group’s equity ratio rose from 5.0% on 31 March 2021 to 7.2%. The equity ratio for the Heidelberger Druckmaschinen AG parent company is at a stable level of around 28%. 

Sales forecast for FY 2021-22 to at least Euro 2.1 billion

Based on incoming orders and net sales achieved in the first three quarters, Heidelberg specifies that expected sales volumes will be at least Euro 2.1 billion (previously – at least Euro 2 billion) for the financial year 2021/2022. As already announced, the EBITDA margin based on sales is still expected to be between 7 and 7.5 percent. Ensuring the availability of parts in the struggling supply chain situation and the development of the pandemic situation remain challenging. Following significant losses in previous years, Heidelberg is expecting a slightly positive net result after taxes in the financial year 2021-22. That being the case, it is envisaged that leverage will remain at a low level. 


The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital 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.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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– Naresh Khanna

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