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DGAP-Adhoc: Heidelberger Druckmaschinen AG: -2-

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DJ DGAP-Adhoc: Heidelberger Druckmaschinen AG: Cyclical reluctance to invest weighs on start of 2019/20 financial year



DGAP-Ad-hoc: Heidelberger Druckmaschinen AG / Key word(s): Quarter
Results/Forecast
Heidelberger Druckmaschinen AG: Cyclical reluctance to invest weighs on
start of 2019/20 financial year

17-Jul-2019 / 22:09 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation
(EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

*· Key figures for 1st quarter down year-on-year*

*· Sales forecast confirmed, margin target and expected net result after
taxes adjusted*

The business performance of Heidelberger Druckmaschinen AG (Heidelberg) in
the first quarter (April 1, 2019 to June 30, 2019) of financial year 2019/20
was impacted in particular at the end of the reporting period by the
increasing reluctance to invest and the corresponding shift in sales due to
the economic downturn. In the traditionally weakest quarter of the year, the
company recorded sales of EUR 502 million, compared with EUR 541 million in
the same period of the previous year. Especially in Germany and parts of
Europe, it was not possible to repeat the previous year's performance.
Demand for contract offerings (service, software and supply contracts for
consumables and, in the final stage, subscription contracts including
equipment) developed positively, with the proportion of recurring revenues
rising by almost 10 percent year-on-year to around EUR 80 million. Due to
the ramp-up, however, it has not yet been possible to compensate for the
overall decline in sales.

Despite significantly higher demand in China as a result of the positive
outcome of the Print China trade fair, as at June 30, 2019, incoming orders
were down on the previous year (EUR 665 million) at EUR 615 million. At
around EUR 14 million (including the IFRS 16 effect of around EUR 4
million), EBITDA excluding restructuring result was also below the
unadjusted prior-year figure of around EUR 20 million. After taxes, the
Group reported a minus of around EUR 31 million (previous year: EUR -15
million). In view of the net working capital build-up during the year and
investments in the expansion of digital business models, free cash flow was
negative at EUR -83 million (previous year: EUR -45 million).

For the 2019/20 financial year as a whole, Heidelberg continues to
anticipate sales at the previous year's level. Despite the economic downturn
and the associated reluctance to invest in the equipment business, the
company expects to compensate for this by further stable expansion of the
contract business. However, the reluctance to invest is also leading to a
product mix with lower overall profitability in the equipment business. The
company is therefore adjusting its outlook for the operating result in the
current financial year and is assuming a target margin for EBITDA excluding
restructuring result in a range of 6.5 to 7 percent of sales (to date 7.5 to
8.0 percent). A break-even net result after taxes is now expected.

Heidelberg will publish the complete interim statement of the 1st quarter
2019/20 as planned on August 6, 2019.

Contact:
Heidelberger Druckmaschinen AG

Corporate Public Relations
Thomas Fichtl
Phone: +49 (0)6222 82-67123
Fax: +49 (0)6222 82-67129
E-mail: thomas.fichtl@heidelberg.com

Investor Relations
Robin Karpp
Phone: +49 (0)6222 82-67120
Fax: +49 (0)6222 82-99 67120
E-Mail: robin.karpp@heidelberg.com

*Important note:*

This press release contains forward-looking statements based on assumptions
and estimations by the Management Board of Heidelberger Druckmaschinen
Aktiengesellschaft. Even though the Management Board is of the opinion that
those assumptions and estimations are realistic, the actual future
development and results may deviate substantially from these forward-looking
statements due to various factors, such as changes in the macroeconomic
situation, in the exchange rates, in the interest rates, and in the print
media industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no
warranty and does not assume liability for any damages in case the future
development and the projected results do not correspond with the
forward-looking statements contained in this press release.
Information and Explanation of the Issuer to this News:

Cyclical reluctance to invest weighs on start of 2019/20 financial year -
sales forecast confirmed, margin target adjusted

The business performance of Heidelberger Druckmaschinen AG (Heidelberg) in
the first quarter (April 1, 2019 to June 30, 2019) of financial year 2019/20
was impacted in particular at the end of the reporting period by the
increasing reluctance to invest and the corresponding shift in sales due to
the economic downturn. In the traditionally weakest quarter of the year, the
company recorded sales of EUR 502 million, compared with EUR 541 million in
the same period of the previous year. Especially in Germany and parts of
Europe, it was not possible to repeat the previous year's performance.
Demand for contract offerings (service, software and supply contracts for
consumables and, in the final stage, subscription contracts including
equipment) developed positively, with the proportion of recurring revenues
rising by almost 10 percent year-on-year to around EUR 80 million. Due to
the ramp-up, however, it has not yet been possible to compensate for the
overall decline in sales.

Despite significantly higher demand in China as a result of the positive
outcome of the Print China trade fair, as at June 30, 2019, incoming orders
were down on the previous year (EUR 665 million) at EUR 615 million. At
around EUR 14 million (including the IFRS 16 effect of around EUR 4
million), EBITDA excluding restructuring result was also below the
unadjusted prior-year figure of around EUR 20 million. After taxes, the
Group reported a minus of around EUR 31 million (previous year: EUR -15
million). In view of the net working capital build-up during the year and
investments in the expansion of digital business models, free cash flow was
negative at EUR -83 million (previous year: EUR -45 million).

*Sales forecast confirmed, margin target adjusted - Management Board
initiates measures to improve earnings and structure *
For the 2019/20 financial year as a whole, Heidelberg continues to
anticipate sales at the previous year's level. Despite the economic downturn
and the associated reluctance to invest in the equipment business, the
company expects to compensate for this by further stable expansion of the
contract business.

'The increasing share of recurring contract business will have an
increasingly stabilizing effect on our total sales,' said Rainer
Hundsdörfer, CEO of the company. 'We will counter the negative impact on
earnings with short-term measures and sustainable structural improvements.

The successful expansion of the contract business means that the customer
relationship is sustained at a higher share of wallet as a basis for
business that is more resistant to cyclical fluctuations. However, the
reluctance to invest is also leading to a product mix with lower overall
profitability in the equipment business. The company is therefore adjusting
its outlook for the operating result in the current financial year and is
assuming a target margin for EBITDA excluding restructuring result in a
range of 6.5 to 7 percent of sales (to date 7.5 to 8.0 percent). A
break-even net result after taxes is expected.

As a consequence of this development, the Management Board has decided to
review planned investments, significantly increase cost discipline and use
instruments to make working hours more flexible in the short term in order
to stabilize the operating result. In addition, the projects initiated to
increase efficiency (Operational Excellence) such as the optimization of the
manufacturing footprint, the adjustment of sales structures to new business
models and the expansion of shared services will contribute to reducing
structural costs in the future. In addition to measures to stabilize
earnings, free cash flow is expected to improve sustainably in the coming
quarters as a result of the reduction in capital expenditure plans and the
expected reduction in net working capital.

Investment projects in the new product and solution offerings from
Heidelberg's ongoing digital transformation will be implemented as planned.
The goal remains to strengthen the contract and subscription business with
recurring revenues, to expand the share of wallet per customer and to
significantly reduce the impact of economic cyclicality on the company. In
the medium term, the share of sales from recurring contract business is to
be increased to around 1/3 of total sales.

Heidelberg will publish the complete interim statement of the 1st quarter
2019/20 as planned on August 6, 2019.

*Next important date: *
The Annual General Meeting for financial year 2018/2019 is taking place in
Mannheim on July 25, 2019.

Image material, and additional information about the company are available
in the Press Lounge of Heidelberger Druckmaschinen AG at www.heidelberg.com
[1].

*Heidelberg IR now on Twitter:*
Link to the IR Twitter channel: https://twitter.com/Heidelberg_IR [2]
On Twitter under the name: @Heidelberg_IR

*Further information:
Corporate Communications *
Thomas Fichtl
Phone: +49 6222 82-67123
Fax: +49 6222 82-67129
E-mail: Thomas.Fichtl@heidelberg.com

*Investor Relations *
Robin Karpp
Phone: +49 6222 82-67120
Fax: +49 6222 82-99 67120
E-mail: robin.karpp@heidelberg.com

*Important note:*

This press release contains forward-looking statements based on assumptions
and estimations by the Management Board of Heidelberger Druckmaschinen
Aktiengesellschaft. Even though the Management Board is of the opinion that
those assumptions and estimations are realistic, the actual future
development and results may deviate substantially from these forward-looking
statements due to various factors, such as changes in the macroeconomic

(MORE TO FOLLOW) Dow Jones Newswires

July 17, 2019 16:10 ET ( 20:10 GMT)


situation, in the exchange rates, in the interest rates, and in the print
media industry. Heidelberger Druckmaschinen Aktiengesellschaft gives no
warranty and does not assume liability for any damages in case the future
development and the projected results do not correspond with the
forward-looking statements contained in this press release.

17-Jul-2019 CET/CEST The DGAP Distribution Services include Regulatory
Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de
Language: English
Company: Heidelberger Druckmaschinen AG
Kurfürsten-Anlage 52-60
69115 Heidelberg
Germany
Phone: +49 (0)6222 82-67121
Fax: +49 (0)6222 82-67129
E-mail: investorrelations@heidelberg.com
Internet: www.heidelberg.com
ISIN: DE0007314007
WKN: 731400
Indices: SDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover,
Munich, Stuttgart, Tradegate Exchange
EQS News ID: 842817

End of Announcement DGAP News Service

842817 17-Jul-2019 CET/CEST


1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=38a04147975d30b9f88f6d879e4171c3&application_id=842817&site_id=vwd&application_name=news
2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=df7df9f75e519b1d421606f060937c9e&application_id=842817&site_id=vwd&application_name=news


(END) Dow Jones Newswires

July 17, 2019 16:10 ET ( 20:10 GMT)
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