Heidelberg figures up but MBO deal blocked

Towards the end of last year Heidelberg announced that it would take over the MBO Group but now the German Federal Cartel Office has blocked this acquisition so that MBO will continue to operate as a separate company. 

Heidelberg’s main headquarters is in Wiesloch, Germany.

Heidelberg has mostly sold off its post-press business to the Chinese Masterwork Group. But the deal would have boosted Heidelberg’s finishing options for digital print. Rainer Hundsdörfer, Heidelberg’s CEO, commented: “We take note of the decision with regret and moving on, even though we see the future market position of the combined company’s differently.”

In the meantime, Heidelberg has announced its preliminary financial results for the year ending 31 March 2019, showing that it has broadly met its targets. Thus group sales were up 3 percent to €2,490 million. The Earnings Before Interest, Tax, depreciation and Amortisation, or EBITDA, was up from €172m to €180m, while the net result after tax was €21m, up from the €14m of the previous year. The company’s operating profit margin was 7.2 percent.

However, Heidelberg has warned that weakness in the global economy will affect the take up of new digital equipment, not helped by the loss of the MBO deal. Hundsdörfer added: “This development makes us all the more determined to pursue the Group’s reorganization vigorously. The expansion of the digital business models and the associated higher proportion of recurring contract sales will make us less susceptible to economic fluctuations in the future.”

The German print industry association VDMA has also warned that trade disputes between the US and China as well as Brexit may have further impact on global markets. Consequently, Heidelberg expects sales to rise at a slower pace than previously planned, with a significantly higher proportion contract business, which tends to be resistant to economic cycles. The company did manage to sign around 30 contracts in the last financial year for its new subscription model, and is looking to this to offset any slow down in press sales. 

Hundsdörfer concluded: “There is no alternative to the ‘Heidelberg goes digital’ strategy, and we will increasingly reap the rewards of our strategic activities. Unfortunately, current economic developments are dampening our growth dynamic, even though the market potential for digitization in the printing industry and for digital packaging printing is as big as it has ever been.”

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