Heidelberg figures show potential for subscription model

Heidelberg has released its figures for the first half of this financial year, showing incoming orders up by 6 percent, from €1,234 million to €1,306 million, with Heidelberg claiming that currency exchange rates have cost it around €17 million.

Heidelberg’s main headquarters is in Wiesloch, Germany.

Heidelberg says that 20 customers have signed subscription contracts covering the entire press life cycle – including service, software, and consumables – with the company expecting sales of up to €100 million, in particular for services and consumables, over the standard five-year term of those subscription contracts, which represent an annual sheet volume in the order of 1 billion pages.

Heidelberg estimates that it will sign up a further ten subscription contracts for the year as a whole, and thus is anticipating that its order backlog will grow further. However, Heidelberg is hoping to expand this approach by offering subscription contracts to customers in other regions and claims that it can sign up to 100 of these in the coming year.

Heidelberg also saw its net sales rise by 6 percent to €1,114 million. The EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) have gone up from €60 million to €62 million though this excludes the restructuring costs.

However, the overall financial result for the first half of the year is a loss of €28 million, slightly worse that the €24 million loss from the previous six months. This is partly down to the partial repayment of €55 million of the existing high-yield bond, which was completed in mid-July, resulted in non-recurring transaction and early redemption charges though this will lead to lower interest payments in the future. Heidelberg also suffered from higher restructuring costs of around €5 million.

The operating cash flow also dropped from €35 million to €27 million in this half, while the free cash flow fell from €–32 million in the previous year to €–86 million, which Heidelberg attributes partly to an increase in inventories due to the growing order backlog and the start-up of digital operations as well as investments in the construction of the innovation center at the Wiesloch-Walldorf site.

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