Heidelberg order levels recovering
A press release from Heidelberg dated 10 February 2022 states that due to the increasingly tangible successes yielded by the company's transformation, plus growing demand from China and, since the 3rd quarter, from Europe, Heidelberg is raising its target operating return for the financial year 2020/21 equally a whole. Consequently, the company anticipates that its EBITDA margin excluding restructuring effect volition grow to approximately 7%, even though the coronavirus pandemic may lead to a sales refuse of around € 450 meg to € 500 million compared to the previous year (previous year's sales: € 2,349 one thousand thousand) for the yr as a whole.
Previously, Heidelberg had anticipated an EBITDA margin that would, at its lowest, equal that of the previous year at 4.three%. The company adds that at that place is an encouraging sign for the coming months that print volumes among its customers take almost reached the previous yr's levels, with the print volume in the packaging sector even exceeding the previous year's level.
"The successful roll-out of the transformation measures has enabled Heidelberg to attain a clearly positive operating result, despite the huge pressures caused past COVID-xix. When information technology comes to both our finances and our balance sheet, nosotros take done our homework. Signs of recovery are now emerging on the markets in Prc and Europe that are important to u.s.. That is why our EBITDA target margin excluding restructuring result is existence increased to effectually 7%. The growing interest in our contract business concern and potent demand for our electromobility charging stations are as well grounds to be optimistic nigh the future," says Heidelberg CEO Rainer Hundsdörfer, commenting on the developments.
In the third quarter, the company says the numerous measures of the transformation plan launched in March of concluding year more than compensated for the negative effect on earnings acquired past a meaning drop in sales due to Covid-19. As a result, later nine months of the financial yr 2020/21 (1 April to 31 December 2020), the operating issue, including furnishings from the implemented measures, was above that of the same menses of the previous year. In addition, the period under review saw a slightly positive cyberspace result after taxes and significantly reduced net financial debt.
Reduction of 1,600 employees worldwide by 2023
The press release is quite detailed on both the successes and some of the company's transformation procedure's setbacks. One of the most of import statements to our view (editor IPP & PSA) is that the visitor will be reducing its human resource worldwide by 1,600 employees over the side by side three years. It cites the measure as "Cutting approximately one,600 jobs worldwide by 2023 (but under one,000 of which will be cutting during this financial year), a motility that has been agreed with employee representatives and is being implemented on a socially acceptable footing."
Strategic milestones
In the year under review, Heidelberg reached several milestones in its strategy to safeguard the visitor's future on a sustainable basis, including –
– Reorganizing the company pension scheme in Germany, which bolstered the result and shareholder's disinterestedness with earnings of € 73 meg.
– Focusing on its core activities and selling the Belgian subsidiary CERM and the Belgian production site for printing chemicals, which made possible a total gain on disposal of € 19 million.
– Discontinuing unprofitable product lines that previously had an adverse event on the result amounting to approximately € 50 million a year.
– Repaying the corporate bond early, which will disburden the financial upshot past € 12 1000000 a yr.
– Cutting approximately 1,600 jobs worldwide by 2023 (merely under i,000 of which will exist cutting during this financial yr), a move that has been agreed with employee representatives and is being implemented on a socially acceptable footing. With additional sustainable savings in material and staff costs, this downsizing leads to savings of more than € 170 million for the fiscal year 2022/23.
– Selling property in Wiesloch-Walldorf and the Print Media Academy in Heidelberg for a purchase cost totaling more than € 60 1000000 as part of a site and structural optimization strategy.
– Agreeing to a production joint venture with the Chinese company Masterwork Group, which is creating opportunities in Asia and offers much better cost-efficiency.
– Doubling the product capacity for Heidelberg Wallboxes – the charging stations for electric cars – past April 2021.
Gallus sale falls through
The auction of the Gallus Group, which did non get ahead at the finish of January 2022 despite a valid buy contract, is clouding the positive flick. However, this is non causing limitations concerning the results forecast for the current financial year. CFO Marcus A. Wassenberg explains, "All in all, we have made much faster and more successful progress with our company's transformation than previously reported. Nosotros have raised more than € 450 million in liquidity, reduced debt by approximately € 260 million, moved away from loss-makers, and volition reduce costs by more than € 170 million a yr on a sustainable basis. We are therefore confident we will render to attractive profitability in the medium term."
Figures for the offset nine months of the fiscal year 2020/21 –
order levels looking improve
Although the market environment is however challenging, there were further signs of recovery for Heidelberg during the 3rd quarter. While the Chinese marketplace had already reached almost pre-crisis levels, the business concern started to get dorsum to normal levels in Europe, also. After nine months of 2020/21 (1 April 2022 to 31 December 2020), sales were at € 1,289 million and therefore still approximately 24% below the same menstruum of the previous year (€ one,690 million). At € one,421 one thousand thousand, incoming orders were 25% below the previous year (€ 1,900 million). However, the shortfall was lower in the third quarter, at just 12%, and, in Dec, incoming orders were dorsum higher up the previous twelvemonth'due south figure for the first time in this financial yr. The lodge backlog rose by € 55 million compared with the previous quarter, reaching € 682 meg.
In a twelvemonth-on-year comparison, EBITDA excluding restructuring results increased from € 117 meg to € 147 one thousand thousand, despite lower sales. On the one hand, the cost state of affairs was improved by brusk-time working (which continued to drop in the quarter under review) and cost savings from the implemented transformation measures, which amounted to approximately € 60 million after three quarters. On the other hand, earnings of € 73 million from reorganizing the pension plans for employees in Deutschland every bit well as from the auction of the Belgian subsidiary CERM (approx. € 8 million) and the Belgian product site for press chemicals (around € 11 million) also had a positive touch. In the third quarter, EBITDA excluding restructuring result was € 50 million, and the EBITDA margin excluding restructuring effect was ten.4%. Afterwards ix months, EBIT excluding restructuring results was € 88 million and substantially college than the previous twelvemonth (€ 46 1000000). On the whole, expenses for transformation measures led to a restructuring result of € –38 million (previous yr: € –viii million). Later on factoring in slightly higher financial expenses, Heidelberg achieved a slight net profit later on taxes of € 3 one thousand thousand, having recorded a loss of € –10 meg in the previous twelvemonth.
Free cash flow in the third quarter positive at € 42 one thousand thousand
Due to the conversion of securities into cash and cash equivalents and inflows from the portfolio mentioned above measures and improvements in internet working capital, complimentary cash flow was improved in the period under review past € 63 million to € –10 1000000. A positive figure of € 42 one thousand thousand was achieved in the third quarter. Post-obit the comprehensive debt relief measures, net financial debt is € 127 million and thus € 262 meg below the comparable figure from the previous year. Against this backdrop, leverage (the ratio of net financial debt to EBITDA excluding restructuring effect from the last 4 quarters) dropped to just ane.0 (previous year: one.9). Despite the slightly positive net profit later taxes, the further significant reduction in actuarial involvement rates for the valuation of pension obligations in Deutschland meant that the equity ratio as per IFRS dropped to 2.6%, which Heidelberg considers unsatisfactory. All the same, the parent visitor all the same has a solid equity ratio of around 26% in its financial statement prepared based on German commercial police.
Forecast raised for profitability in FY 2020/21 as a whole
Given the recent noticeable improvement in the order situation in many regions, increasing savings as office of the transformation plan, and the income generated from asset management and accounting measures, Heidelberg is raising its forecast for the EBITDA margin excluding restructuring result for the financial twelvemonth 2020/21 as a whole. Despite the anticipated Covid- nineteen related declines in sales of around € 450 million to € 500 million compared with the previous yr (€ 2,349 million), the Company now expects a pregnant comeback in the EBITDA margin excluding restructuring event to around 7%. Previously the Visitor had targeted an EBITDA margin excluding restructuring results of at least the same level as the previous year (4.3%). The outlook is being adjusted, although the Gallus Grouping's planned sale will not be completed. In the fiscal twelvemonth 2022 / 2021, Heidelberg expects a significantly improved, but one time again negative, afterwards-tax result against the previous twelvemonth and a rise in leverage starting from a low level.
The 2020/21 nine-month report, paradigm material, and further data about the visitor are available in the Investor Relations and Press Lounge of Heidelberger Druckmaschinen AG at www.heidelberg.com.
Source: https://packagingsouthasia.com/events/heidelberg-order-levels/
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