HEIDELBERG (dpa-AFX) - Heidelberger Druck has felt the effects of weakening demand in the third quarter. The weaker market development made it necessary to take countermeasures, said company CEO Ludwin Monz in a telephone conference with journalists on Wednesday. Against the backdrop of falling order intake, the company has introduced short-time working in parts of production and at several locations since January. This will initially run until the end of March. "We expect short-time working to result in short-term savings in the low single-digit million range," said the manager.

After early gains, the share price slipped into negative territory. Most recently, the share fell by around 3.7 percent, making it one of the weakest stocks in the second-line index SDax. Most of the key figures were slightly below his expectations, wrote analyst Stefan Augustin from Warburg Research. Incoming orders slumped in the third quarter - a sign of a more difficult business environment.

The lack of orders now could be reflected in the figures in around six months' time. "However, we are counting on the economy recovering somewhat by then and demand hopefully picking up again due to falling interest rates and the industry trade fair Drupa," said Monz. The trade fair usually takes place every four years. Printing press manufacturers are hoping for many orders at Drupa, which begins at the end of May.

In the first nine months of its 2023/24 financial year, the company was able to keep its earnings almost stable thanks to improved business in the packaging segment. Operationally, things went better thanks to a savings program, among other things. "In a weak macroeconomic environment, Heidelberg was able to hold its own in the first three quarters of the financial year," said Monz according to the press release. Sales and the operating result developed as expected. The company confirmed its targets for the financial year to the end of March.

In the nine months to the end of December, turnover fell by 2.5 percent year-on-year to just under 1.7 billion euros, as the company announced in Heidelberg. In contrast, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for special effects, increased by eight percent to 135 million euros. The corresponding margin improved from 7.2 percent in the previous year to 8.0 percent.

For the year as a whole, turnover and the adjusted earnings margin before interest, taxes, depreciation and amortization (EBITDA margin) are expected to reach approximately the previous year's figures of a good 2.4 billion euros and 7.2 percent.

At the bottom line, profit in the first three quarters fell by a good third to 34 million euros due to higher taxes and increased interest expenses for pensions.

Meanwhile, Heidelberger Druckmaschinen felt the effects of the significant slowdown in investment demand in the German mechanical and plant engineering sector in the third quarter in terms of incoming orders. In addition, some customers held back before the start of Drupa.

As a result, incoming orders shrank by nine percent to just under 1.7 billion euros in the first nine months, with the decline amounting to almost a fifth in the third quarter alone.

Meanwhile, the company is cutting costs in order to become more profitable. As part of a program launched in April last year, around 250 initiatives have been identified for the next three years, Heidelberger Druckmaschinen announced. These should help the company to generate sustainable positive cash inflows in the future, explained Monz. And this would also be possible without positive special factors such as the sale of land, as was the case in previous years. The free cash flow is expected to be positive by the end of the financial year (end of March). In the first nine months, there was still a cash outflow of 54 million euros.

Following a profound crisis, Heidelberger Druck repositioned itself a few years ago, scrapping loss-making products, cutting jobs and focusing on packaging printing and digitization - in other words, more software automation for customers in the printing industry, among others.

Since 2018, the company has also been selling self-developed wallboxes - small systems attached to the garage wall for fast charging of electric cars. They are sold via Amazon and partly in partnerships with energy suppliers. With the acquisition of the charging station technology from energy company EnBW at the end of 2021, products for public spaces were also added./mne/ngu/mis