Heidelberg Publishes figures for Second Quarter, First Six Months of 2012/2013

HEIDELBERG, GERMANY—November 7, 2012—After the first half of financial year 2012/2013, Heidelberger Druckmaschinen AG (Heidelberg) is on track to achieving its operational objectives. In the second quarter (July 1 to September 30, 2012), incoming orders were on a par with the previous year's level at EUR 668 million. Compared with the prior-year period, incoming orders in the first half-year rose by EUR 225 million to EUR 1.558 billion (previous year: EUR 1.333 billion) as a result of the drupa industry trade show in May. At EUR 790 million, the order backlog at the end of the first half-year was around EUR 60 million higher than in the previous year.

Sales in the second quarter climbed to EUR 697 million, 10 percent up on the same period in the previous year (EUR 636 million). At EUR 1.217 billion, net sales in the first half-year were slightly up on the previous year's level (EUR 1.18 billion), as planned.

"Development in the industry continues to be stable and demand for our products is robust," said Heidelberg CEO Gerold Linzbach. "Based on the current financial year to date, we are confident we will meet our targets."

The result of operating activities (EBIT) excluding special items of EUR 1 million was slightly positive in the second quarter as a result of higher sales and therefore higher profit contributions. This is a significant improvement on the first quarter (EUR -58 million). At EUR -57 million, EBIT excluding special items in the first half-year was, as expected, down on the previous year's figure (EUR -21 million) due to trade show and product launch costs and low profit contributions resulting from the low level of sales in the first quarter. Special items amounted to EUR 22 million in the first half-year and were primarily the result of expenses relating to the Focus 2012 efficiency program.

The financial result improved from EUR -42 million in the first half of last year to EUR -37 million in the same period this year. Income before taxes in the second quarter was EUR -33 million compared with EUR -19 million in the previous year. Income before taxes in the first half-year fell from EUR -66 million in the previous year to EUR -116 million this year. Income after taxes was EUR -30 million in the second quarter and EUR -104 million in the first half of the year (previous year: EUR -66 million).

"As expected, sales and results in the second quarter were much better than in the first. After six months, these figures are therefore in line with the company's own planning," said Heidelberg CFO Dirk Kaliebe. "We are on track to achieving the planned savings from the Focus 2012 efficiency program. Thanks to our active asset management, our free cash flow is nearly balanced and net financial debt has remained stable at a low level."

At EUR -3 million, free cash flow came close to balancing in the second quarter thanks to consistent asset management (previous year: EUR -12 million) and was therefore significantly improved on the previous quarter (EUR -112 million). Net financial debt at the end of the first half-year remained on a par with the level at the end of the previous quarter at EUR 357 million.

As of September 30, 2012, Heidelberg had a workforce of 14,745 worldwide (previous year: 15,782). This represents a year-on-year reduction of around 1,000 staff.

Results by segment and region
Incoming orders in the Heidelberg Equipment segment amounted to EUR 390 million in the second quarter. In the first half-year, they came to EUR 988 million, a 22 percent rise on the previous year. As expected, net sales in this segment increased by 11 percent to EUR 414 million in the second quarter. At the end of the first half-year, sales in this segment matched those of the previous year at EUR 669 million. In the Heidelberg Services segment, incoming orders in the second quarter came to EUR 275 million. In the first half-year, they amounted to EUR 564 million, a 10 percent rise on the previous year as a result of the drupa trade show. Net sales in this segment were EUR 280 million in the second quarter. In the first half-year, sales rose by 9 percent to EUR 542 million against the previous year due to an increase in net sales from consumables and the service business.

The order situation at Heidelberg was around or above the previous year's level in the individual regions at the half-year mark and was thus in line with expectations. The 40 percent year-on-year increase in the North America region was particularly pleasing. In the Asia/Pacific region and in Europe, Middle East and Africa (EMEA), the half-year figures also surpassed those of 2011/2012. In Eastern Europe, incoming orders remained at the previous year's level while the order intake in South America fell slightly below the prior year. It was a similar story for net sales in the first half-year: Compared with the previous year, net sales rose considerably in Eastern Europe, North America, and Asia/Pacific, but remained stable in the EMEA region and fell short of the prior-year figure in South America.

Outlook confirmed for the current financial year 2012/2013; amendments to IAS 19 taken into account in the forecast for financial year 2013/2014
The sovereign debt crises and the volatile overall economic and market environment continue to make it difficult to forecast how business will develop. For the current financial year 2012/2013, Heidelberg expects a clear shift into the second half-year of the sales favored by orders generated at the trade show, with a consequent improvement in profit contributions. Heidelberg continues to expect a clearly positive result of operating activities excluding special items, which, however, was negatively impacted especially in the first half of the year by costs incurred for drupa and product launches. Around one third of the planned savings from the Focus 2012 efficiency program of approximately EUR180 million will already take effect in the current financial year. The expenditures required for this purpose, however, will weigh on the financial result. As a consequence, income before taxes will be negative. In the financial year 2012/2013, free cash flow will see a significant negative impact from the pro-rata expenditures for Focus 2012; thus, net financial debt will also increase in the meantime.

Heidelberg will apply the new version of the international accounting standard IAS 19, which aims to improve transparency and comparability when reporting pension commitments, for the first time from financial year 2013/2014. Depending on how pension commitments have been recognized previously, there will be consequent effects on the key performance data in the statements of financial position and income statements of companies reporting under international accounting standards.

In the coming financial year 2013/2014, the cost reductions resulting from Focus 2012 will be fully effective for the first time and will result in annual savings of approximately EUR 180 million. The compulsory adoption of the new version of IAS 19 from the coming financial year will have effects—depending on the performance of various parameters—on Heidelberg's income statement. In particular, income estimated to be between EUR 25 million and EUR 30 million currently included under the result of operating activities excluding special items will be reclassified under the financial result. Heidelberg intends to make up as soon as possible for the negative effects of this reclassification on its target of achieving a result of operating activities excluding special items of around EUR 150 million. As income before taxes is virtually unaffected just by the change in reporting, the current forecast of income before taxes being clearly positive and accordingly of achieving a net profit for the year remains valid.

"Heidelberg has only one objective at the moment—to get back into the black and stay there. We are therefore systematically gearing the activities of all business areas to this goal," said Heidelberg CEO Gerold Linzbach with a view to the Group's future.

Other dates:
The figures for the third quarter of financial year 2012/2013 are due to be published on February 7, 2013.

Source: Heidelberg.