INDUSTRY NEWS
Based on solid economic development , Heidelberg expects the profitable upward trend to continue in subsequent years . This is down to the company ’ s implementation of realignment measures , the focus on its profitable core business , and the expansion of growth areas .
Cost savings of some Euros 140 million are predicted during the financial year 2021 / 22 . Total savings exceeding Euros 170 million are expected to take full effect in FY 2022 / 23 , along with a lasting reduction in the Group ’ s operating break-even point , measured in EBIT , to around Euros 1.9 billion .
The potential for sustained growth and increases in value is based primarily on opportunities in packaging printing , digital business models , business in China , and new technology applications . For example , Heidelberg Wallbox capacities in the e-mobility sector will once again be doubled this year to meet the dynamic growth in customer demand .
A start was already made in the quarter under review , with the third production line being taken into operation . The planned international expansion also means this positive development is likely to continue . Despite the sums being invested in this expansion , the company ’ s e-mobility business is already turning a profit .
“ The enormous efforts we have made to transform the company are now bearing fruit . Thanks to the expected improvements in our operating result , the significant free cash flow potential , and a historically low level of debt , we are very confident in financial terms , too , that we can realize our huge opportunities for the future . It ’ s been many years since Heidelberg was last in this situation ,” adds the company ’ s CFO Marcus A . Wassenberg .
First-quarter operating results Thanks to the broad market recovery in virtually all sectors , Heidelberg recorded around Euros 441 million in sales for the first quarter of FY 2021 / 22 , which was far better than in the previous year ’ s equivalent period ( Euros 330 million ). Correspondingly , higher confidence and greater investment readiness have seen incoming orders climb by close to 90 percent ( compared with the previous year ’ s equivalent period ), from Euros 346 million to Euros 652 million . This has increased the order backlog to Euros 840 million , which creates a good basis for achieving the year ’ s targets . EBITDA amounted to Euros 15 million ( equivalent quarter of the previous year : Euros 40 million ), and the EBITDA margin was 3.5 percent . There was a significant improvement in the quality of earnings compared with the corresponding period of the previous year . In the first quarter of that year , earnings of some Euros 73 million from restructuring the occupational retirement provision and the extensive use of short-time working had a very positive impact .
This year , the increased sales volume and savings from the company ’ s transformation were beneficial . For example , the company even improved on EBITDA as recorded in the corresponding quarter of the financial year 2019 / 20 , i . e ., before the coronavirus pandemic ( Euros 11 million , including the effects of restructuring ), despite a lower sales figure than in that year . EBIT amounted to Euros -4 million ( equivalent quarter of the previous year : Euros 20 million ). The far lower debt significantly affected the financial result ( Euros -8 million compared with Euros -13 million in the previous year ). This led to an overall net result after taxes of Euros -14 million ( an equivalent quarter of the previous year : Euros 5 million ).
Positive free cash flow In the period under review , a clear improvement in net working capital and an inflow of funds in the mid-tens of millions of euros from selling a piece of land in Wiesloch led to a significant improvement in the free cash flow from Euros -63 million to Euros 29 million .
The company succeeded in reducing its net financial debt at the end of June 2021 to the historically low level of Euros 41 million ( the previous year : Euros 122 million ). Leverage ( net financial debt to EBITDA ratio ) was 1.7 . The Group ’ sGroup ’ s equity ratio fell to around 4 percent due to reducing the actuarial interest rate for the valuation of pension obligations in Germany and the negative net result after taxes . However , the equity ratio for the parent company , Heidelberger Druckmaschinen AG , remains at a solid level of around 28 percent .
Growing optimism In view of the clearly positive development of orders and the encouraging operating result trends in the first quarter – and despite the continuing uncertainties regarding the COVID-19 pandemic – Heidelberg is standing by its targets for the financial year 2021 / 22 . The company is anticipating an increase in sales to at least Euros 2 billion ( previous year : Euros 1,913 million ).
Based on current projects focusing on its profitable core business , Heidelberg is also expecting further earnings from asset management in the financial year 2021 / 22 . Since the level and timing of the gains on disposal from the planned transactions cannot yet be evaluated with sufficient certainty , an EBITDA margin of between 6 and 7 percent is still expected , which is up from the previous year ’ s level ( previ-
25 August 2021 Packaging South Asia
51