avatar Heidelberg Benelux B.V. Wholesale Trade
  • Location: NOORD-HOLLAND 
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    To our Investors Heidelberg wants to be more than just a leading machine builder in the future. The Company intends to step up its customer focus and further expand its services such as consulting, maintenance, repair and the sale of consumables. And to make money from them. To this end, under the leadership of Gerold Linzbach, Heidelberg launched a wide range of strategic innovations during 2014/2015. This formed the basis for Heidelberg to turn its restructuring story into a profitable growth story again. Dr. Linzbach, how satisfied And why aren’t the capital markets reduce the number of areas with low were you with the course of the responding as enthusiastically as return in our portfolio, to focus on financial year 2014/2015? you hoped? growth markets that are less cyclical, and to change the culture within Hei- Dr. Gerold Linzbach: Dr. Gerold Linzbach: delberg accordingly, overcoming any In terms of what we planned and im- I’m afraid the stock markets aren’t at lingering resistance – as demonstrated plemented for the strategic reorganiza- our beck and call. First of all, we need by the relocation of our Group head- tion of Heidelberg, 2014/2015 was a to regain the trust in Heidelberg that quarters to Wiesloch. really successful year. In terms of how was lost in the past due to many dis- the capital markets have responded appointments. Lots of market players You mentioned having to regain to it so far, there is certainly room for who have supported Heidelberg for trust – it sounds easy, but surely improvement. years are rightly saying that they’ve it’s anything but? heard it all before and it’s never suc- What do you find most satisfactory ceeded, that the market has kept Dr. Gerold Linzbach: about the Group reorganization? shrinking, that it’s been one round of You’re absolutely right. It’s important cost-cutting after another – in other for me to point out here that we have Dr. Gerold Linzbach: words, an endless restructuring story. started to instill a new sense of val- In 2014/2015, we launched and com- Many who don’t know the printing in- ues in our employees, summed up as pleted as many strategic innovations as dustry well still stick to the cliché “listen, inspire, deliver.” This starts with in the previous ten years put together. “printing is dead.” us listening very carefully to what our At our press conference in June 2014, customers actually expect so that our we unveiled four strategic action areas What are you doing to win over production doesn’t miss the point. for the Group reorganization of Heidel- the skeptics? Then, we need to be open and inspired berger Druckmaschinen Aktiengesell- in order to go in new directions and schaft. Now, around twelve months Dr. Gerold Linzbach: tap into new markets. And we need to later, we are not only fully on schedule To begin with, it’s true that our core deliver what we promise at all levels in in all four areas; the measures for stra- market for equipment has more than terms of measures to be implemented tegic portfolio optimization are already halved in the last years. As a matter of and, of course, results. As far as meas- largely complete, and many of them fact, Heidelberg primarily had to deal ures are concerned, we definitely de- will have a positive impact on income with cost-cutting measures for many livered in 2014/2015. As announced, as of the new financial year, i. e. from years. In contrast, we have worked ex- this involved special items. Therefore, April 1, 2015. tremely hard in the last two years to we will be consistently profitable from 1

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    Interview with Letter from the Heidelberg on Dr. Gerold Linzbach Management Board the Capital Markets 2015/2016. I’m happy to prove this ment. We believe that both have con- on the basis of our four strategic ac- siderable potential for the future and tion areas: firstly, reducing low-margin can be integrated quickly and seam- activities; secondly, increasing profit- lessly. Overall, the two transactions ability in our core business of sheetfed will result in additional sales of over offset; thirdly, expanding services and “We need to deliver what we € 100 million a year for Heidelberg. consumables business; and, last but not promise, at all levels.” least, medium-term generation of the Does this mean that, following significant potential in the digital sector. to this, and already have done so. the reduction of unprofitable Firstly, Heidelberg no longer needs to portfolio items, the phase of Right, let’s start with portfolio produce everything that customers active portfolio expansion is reduction. You once said that used to want, but wasn’t lucrative set to start? around 90 percent of your activ- enough. That means streamlining the ities are essentially in good product range. Secondly, in sheetfed Dr. Gerold Linzbach: health. What do you intend to offset, we have adapted our structures We certainly haven’t finished here, and do to reach 100 percent? to the maturity of the markets. There- we are looking at some interesting fore, we slimmed down significantly in candidates. The medium-term target is Dr. Gerold Linzbach: 2014/2015, shedding around 350 jobs to increase the share of consolidated We haven’t got far to go. In the year at the Wiesloch site to achieve the sales attributable to service and con- under review, the reduction of loss- necessary profitability. So portfolio re- sumables to over 50 percent. Currently making activities centered on the area duction and structure optimization are it is around 40 percent. of postpress. For instance, we entered the main focal points in terms of costs. into a partnership with Masterwork We now come to the hope for the Machinery of China in packaging, and … and where will the growth be future – digital. Heidelberg was in the commercial segment we sold coming from? active here in the past, but pulled parts of the portfolio to Müller Martini. out. Why the change of heart? We also optimized our site structure Dr. Gerold Linzbach: by introducing essential restructuring Put simply, profits are increased Dr. Gerold Linzbach: measures in Ludwigsburg and closing through cost reductions and/or topline, Strategically, Heidelberg’s first steps a the Leipzig site. This affected around i. e. sales, growth. To turn our equity few years ago were not particularly 650 employees. We are anticipating story from one of restructuring to one promising. In this growing market an earnings improvement of around of growth, we need to prove how we segment, the only way to survive is to € 30 million per year as a result of can post an increase in sales after focus on core areas of expertise and these measures. years of decline. One key factor in fi- work with the right partners. Heidel- nancial year 2014/2015 was our in- berg has done its homework here. Let’s move to sheetfed offset – a vestment in the growth segments of For instance, we are cooperating on core business, but also a problem service and consumables. For instance, the development of new products with area in view of the stagnating we purchased the European PSG the technology leaders Fujifilm and market. What are you going to do? Group, which had been a close and Ricoh. In August, we boosted our posi- strong partner of Heidelberg for many tion in digital label printing with the Dr. Gerold Linzbach: years. In addition, we acquired the full acquisition of the Swiss Gallus The market is and always will be subject much smaller Belgian firm BluePrint Group. As a result of this cooperation, to fluctuations, but we need to adjust Products in the printing chemicals seg- the first new digital printing systems 2

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    To our Investors have already been presented and de- deliver what we promise! The first ma- reduction. This must come to an end, livered. In addition, we successfully jor success in this respect was achiev- and it will. Our new portfolio should be completed the purchase of the soft- ing breakeven after taxes, the black able to grow by 2 to 4 percent per year. ware manufacturer Neo7even in the zero. This was a declared aim for We will be measured on this basis. last financial year. We are now in the 2013/2014, and we achieved it for the position we want to be, and will be first time in many years. For 2014/2015, Aren’t your hands tied, particularly unveiling further new digital printing we said at the press conference that when it comes to purchases, be- machines arising from these coopera- the main focus of this financial year cause of your narrow equity base? tions at the next drupa trade show in would be the portfolio reorganization. spring 2016. I have already told you about the pro- Dr. Gerold Linzbach: gress made here. As we have said We are working hard to improve the Can you give us a rough idea of openly, this involved significant special quality of our balance sheet. The cur- the kind of growth Heidelberg is items that eclipsed the operating gains rent equity ratio is certainly not satis- likely to achieve? last year. Excluding these special factory, and the pension obligations items, we also achieved improvements are inflated by the currently low inter- Dr. Gerold Linzbach: in operating earnings last year. est rates. The target here is to reach 15 A while ago, we mentioned a medium- percent first, then 20 percent. We aim term sales target of € 200 million for And where will the impetus to achieve this through future sur- the digital sector. We stand by this – it for the EBITDA margin of at pluses, and the issued convertible is certainly the lower limit. least 8 percent come from? bonds also provide an opportunity. On the other hand, we have already op- And what about profitability? Dr. Gerold Linzbach: timized our financing and liquidity I have set out the dimensions of the structure for the long term, and have Dr. Gerold Linzbach: cost savings for you. The portfolio re- used it to finance the acquisition of We measure all activities to determine duction and streamlining of the struc- PSG, for instance. In addition, we are whether they can achieve the Group tures each make contributions in the always looking into further measures profitability target issued for 2015/2016 double-digit million euro range. Put- to optimize the quality of our balance of at least 8 percent in terms of EBITDA. ting two and two together, assuming a sheet and our financial framework. With digital, this will certainly take a slight increase in sales, the envisaged These include reorganizing the Com- little longer, but we will not be satisfied 8 percent is achieved relatively quickly. pany pension scheme, which removed with anything less. expenses of around € 100 million from Is this the end of the road? our balance sheet on a one-off basis. Staying with this topic, why Through the issue of the convertible should the market believe you Dr. Gerold Linzbach: bond and the corporate bond this past when you say that Heidelberg Slowly, slowly, one step at a time. First, spring, we were able to lower our in- will become consistently profit- we will deliver what we promise. The terest cost in a first step while extend- able from 2015/2016? figure of at least 8 percent is not a one- ing our basic funding until 2022. off target, but a long-term yardstick for Dr. Gerold Linzbach: the future. However, in addition to re- The Company’s return is set to The crucial aspect for me and my col- turn, sustainable sales growth is a sec- rise, the quality of the balance leagues on the Management Board – ond key parameter for our future suc- sheet is set to improve – what and I’m happy to repeat it so that all cess. The topline contracted again in about the return for your share- target groups can hear me – is that we 2014/2015, partly due to the portfolio holders? 3

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    Interview with Letter from the Heidelberg on Dr. Gerold Linzbach Management Board the Capital Markets Dr. Gerold Linzbach: The new Heidelberg is more stream- lined and profitable than in previous years. We are doing everything to en- sure that the restructuring story turns into a growth story again. Investors will “In the 2015/2016 financial come back to us and buy our share in year, we aim to increase the increasing volumes if they can read EBITDA margin to at least about the targeted improvement in performance, a positive free cash flow 8 percent.” and growth potential in black and white in our key figures. I’m convinced of that. 4

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