Heidelberg back in the red

Heidelberg has published its prelinary figures for the last financial year ending 31 March 2020, which show total sales of €2349 million, down 6 percent on the previous year. 

Rainer Hundsdorfer, CEO of Heidelberg.

Naturally, Heidelberg has blamed this on “the increasingly deteriorating economic environment caused by the Covid-19 pandemic” which seems like a bit of a stretch since the WHO only declared the current Corona Virus situation as a pandemic on the 12 March 2020 and it’s unlikely to have affected more than six weeks worth of sales. However, Heidelberg also clarified this to say that this mainly affected the fourth quarter where sales were down from €797 million to €659 million, which alone does not explain the lower total for the year.

Instead the main culprit seems to be Heidelberg not having the right mix of products, which saw preliminary operating results (according to Earnings Before Interest, Tax, Depreciation and Amortisation) fall from €180 million to €102 million. On top of this, Heidelberg has also announced a significant restructuring which had a further €275 million impact on the business so that the net result after taxes is a loss of €343 million, as against the €21 million profit of the previous year.

I’ve already covered Heidelberg’s plan to restructure its debt by taking €380 million from the Heidelberg Pension-Trust e.V nad focussing on the more porifitable products. This has meant that the company’s net debt is now down to €43 million from the end of March 2020, where it had been €250 million in the previous year. The company has agreed most of the arrangements with its employee representatives. 

Marcus Wassenberg, Heidelberg’s CFO, commented: “This considerable improvement in our liquidity gives us essential room for maneuver in these difficult times. Heidelberg is going to implement the announced measures consistently and quickly. We are all aware that the cuts are a significant blow, particularly in the current situation. However, they are absolutely essential to safeguarding the future of Heidelberg.”

Rainer Hundsdörfer, CEO of Heidelberg, added his assessment: “Financial year 2019/20 was shaped by a significant downturn in the global economic climate, and that affected our customers and Heidelberg itself, too. Through our package of measures which we have announced in March, we have paved the way for Heidelberg to achieve stability, improve our liquidity and increase profitability step by step for the long term. The Covid-19 pandemic poses significant challenges for Heidelberg and the entire industry, which we will master alongside our customers and using what Heidelberg has to offer as a technology leader in the printing industry. By joining forces, we will emerge stronger from the crisis.”

However, I think that it’s important to remember that Hundsdörfer and Wassenberg are now the only members of the board so they’re essentially marking their own homework. The restructuring was a bold move but a huge gamble and its impossible to say how the pandemic will play out and what impact it will have on world economies, and therefore how much room for manoeuvre Heidelberg will have.

Heidelberg is due to publish its annual report and the final results on 9 June so we should have a more accurate picture then though we won’t see the true impact of the CoVid-19 crisis until at least the first quarter figures are released later this summer. 


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One response to “Heidelberg back in the red”

  1. Bryan Palphreyman avatar
    Bryan Palphreyman

    …and the subscription model. Capital equipment is hardly ‘netflix’, and you’re laying down a lot of cost to recoup in recurrent revenues over the long term, when the long term (and the product) is unknown.

    …….and of course the exit from digital….again

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