Interim statement Q3 2021/2022

PERSPECTIVES

Heidelberg Group

INTERIM STATEMENT FOR THE THIRD QUARTER OF 2021 / 2022

Figures

  • Incoming orders up 16 percent year-on-year in third quarter; up by around 33 percent at € 1,888 million after the first nine months after the same period of the previous year was severely impacted by COVID-19
  • Order backlog above pre-pandemic level at € 951 million: good basis for next financial year
  • Sales rise by 21 percent to € 1,565 million after first three quarters despite strained supply situation for preliminary products; at least € 2.1 billion now expected for year as a whole (previously: at least € 2.0 billion)
  • EBITDA amounts to € 132 million after the first nine months - significant improvement in operating earnings contribution thanks to increased volume and success in implementing transformation
  • Net result after taxes € 40 million after three quarters
  • Significant improvement in free cash flow to € 69 million after nine months; net debt still close to zero
  • EBITDA margin target for the 2021 / 2022 financial year raised to between 7 and 7.5 percent on August 31, 2021 thanks to higher income from asset management

Facts

  • Transformation and market recovery drive significant improvement in operating performance
  • Availability of parts still posing challenges for production due to supply shortages
  • Agreement entered into with financing partner Munich Re boosts prospects for subscription business
  • Pioneering development in e-mobility: Cooperation with SAP for billing software and acquisition of charging station technology from EnBW
  • Further progress on production site and structural optimization: Around 80,000 m² more of Wiesloch-Walldorf production site to become state-of-the-art industrial and business park
  • Shares return to SDAX small cap selection index

Notes

In individual cases, rounding could result in discrepancies concerning the totals and percentages contained in this interim financial report.

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Interim statement Q3 2021 / 2022

Key figures at a glance

Figures in € millions

Q1 to Q3

Q3

2020/2021

2021/2022

2020/2021

2021/2022

Incoming orders

1,421

1,888

557

643

Order backlog

682

951

682

951

Net sales

1,289

1,565

484

582

EBITDA 1)

109

132

42

57

in percent of sales

8.4

8.4

8.7

9.7

Result of operating activities (EBIT)

50

74

22

37

Financial result

- 35

- 24

- 8

- 7

Net result before taxes

15

50

15

30

Net result after taxes

3

40

12

27

Equity

57

161

57

161

Net debt 2)

127

6

127

6

Leverage 3)

- 1.2

0.0

- 1.2

0.0

Free cash flow

- 10

69

42

- 4

Earnings per share in €

0.01

0.13

0.04

0.09

Number of employees at the end of quarter (excluding trainees)

10,663

9,872

10,663

9,872

  1. Result of operating activities before interest and taxes and before depreciation and amortization
  2. Net total of financial liabilities less cash and cash equivalents and current securities
  3. Ratio of net debt to EBITDA for the last four quarters

General information regarding

Overall assessment of business

this report

development

The Company has reported the key earnings figures of EBIT and EBITDA including restructuring result since April 1, 2021. The prior-year figures have been restated accordingly.

Heidelberg has reported in a new segment structure since April 1, 2021 in order to better reflect its focus on the customer requirements, profitability and potential resulting from the new operating model introduced as part of its reorientation. Reporting in the three segments of Print Solutions, Packaging Solutions and Technology Solutions will allow Heidelberg to manage its business in line with its target markets and the respective customer requirements to an even greater extent than before. The prior-year figures have been restated accordingly.

The business development of Heidelberger Druck­ maschinen AG (Heidelberg) was on a clear upward trajectory in the first nine months (April 1 to December 31, 2021) of the 2021 / 2022 financial year despite the recently rise in volatility due to fresh pandemic restrictions and struggling supply chains.

In the first nine months of the 2021 / 2022 financial year, Heidelberg further expanded its position as the leading digital platform provider for the printing industry, making its Zaikio Procurement industry platform freely available to all print shops and signing up more suppliers for the platform. Using this open and independent collaborative platform, print shops and their suppliers can digitize and

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Heidelberg Group

automate their procurement process based on various fac- tors, including current paper or ink consumption / stock levels. Heidelberg has also further expanded the digitization of its customer relationships in conjunction with useful value-added services and combined all elements of the Heidelberg ecosystem in a digital customer portal called "Heidelberg Plus". Customers can now use mobile devices to monitor machine operation, place orders for consumables or generate service tickets.

Starting in late June 2021, Heidelberg presented a whole series of innovations for the global printing industry with the slogan "It's SHOWTIME!" in spite of the continued challenging market conditions. At an international digital customer event, the Company showcased a number of new and enhanced offerings in the commercial, packaging and label segments. Smart solutions that print shops can use to further boost their competitiveness were demonstrated in short live streams. The event was held in eight different languages at different times of the day and in parallel with the China Print trade show in Beijing. At the latter event, Heidelberg successfully celebrated the world premiere of its new sheetfed offset printing press, the Speedmaster CX 104, which met with considerable interest among cus- tomers. With this new product, the Company is underlining its strong position in the industry's biggest growth mar- ket. Even before the start of series production of the CX 104, Heidelberg had received orders for more than 500 printing units of this series worldwide, a large proportion of them from China. The 1,000th printing unit was sold to a Swedish packaging printer in November 2021.

From the start of the new training year on September 1, 2021, Heidelberg has significantly increased the number of its trainee positions, thereby highlighting its responsibility to vocational training. The importance of training at Heidelberg, the high quality of its standards and its forward -looking approach are demonstrated by its latest awards as one of Germany's best training companies: The newspaper "Die Welt" described it as a "highly attractive training organization" and it received the "Industry 4.0 Tal- ent" prize from the Baden-Württemberg Ministry for Economic Affairs, Labor and Tourism for its design for a mechatronic workplace. Digitization modules are now an

integral part of all vocational training at Heidelberg. This was also a key factor in being awarded maximum points in the Stern report "Germany's businesses with a future" in October 2021. This study focused on how well companies in Germany are prepared for the challenges of digitization, particularly in light of the coronavirus pandemic.

Heidelberg wants to play a part in advancing resource efficiency and the recycling economy in the packaging sec- tor. Heidelberg reiterated its comprehensive commitment to environmentally friendly products and technologies by joining the international Healthy Printing initiative in November 2021, after having already joined the international 4evergreen alliance at the end of September. Heidel- berg had already joined the German Mechanical Engineering Industry Association's (VDMA) Blue Competence sustainability initiative in 2012. In the field of sustainability, Heidelberg has undergone a repositioning and established an ESG Council to embed these aspects more firmly in the Company's strategy. As a key milestone in its comprehensive sustainability strategy, Heidelberg undertook to achieve climate neutrality by 2030 at the end of November 2021. Several measures have been defined and are already being implemented to achieve this goal. In addition to the long-established concepts of environmentally friendly products, sustainable human resources management, compliance and good governance, the focus is now also on enhancing energy efficiency at all production and sales sites and supplying them with "green" energy.

Heidelberg intends to significantly increase its business with digital usage-based subscription models through its strategic partnership with the Munich Re insurance group that was communicated at the start of November 2021. These contract models enable customers to pay for their printing press, service and consumables based on their own output. For Heidelberg, this business model means the potential to generate recurring sales that are less prone to fluctuation. As communicated at the start of November, the insurance group Munich Re has been gained as a financing partner. From financial year 2022 / 2023 on, subscription contracts will be enabled through Munich Re, initially on selected markets, while Heidelberg will continue to be in charge of the product and service side. The partnership will allow Heidelberg to scale this pioneering business model more quickly and more efficiently.

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Interim statement Q3 2021 / 2022

Heidelberg has established itself as one of Germany's market leaders on the growth market of e-mobility with its range of Wallboxes for charging in the private and semi- public domains. The foundation for this growth is the rapid increase in production capacity coupled with the growth of the product portfolio and international expan- sion. Net sales in e-mobility thus increased significantly compared to the same period of the previous year in the first nine months of 2021 / 2022. A fourth production line started operation at the Wiesloch-Walldorf site in fall 2021. In order to grow this business more quickly and more flex- ibly, in June 2021 the transfer to a standalone company, HEI Charge - Heidelberger Druckmaschinen e-Mobil- ity & Charging GmbH, was initiated. Heidelberg entered into a strategic partnership with SAP SE at the end of November to continue developing this business model. The SAP e-mobility software solution offers the users and operators of charging stations standardized and scalable cloud- based services that guarantee end-to-end integration into billing processes. These multi-industry services, coupled with Heidelberg's proven charging solutions, will enable operators to run their charging networks intelligently and thus to establish contemporary fleet management, for example with an integrated billing service, fleet, energy or even detailed load management. These necessary requirements enable companies to convert their vehicle fleets from conventional to electric drive systems. At the start of December, Heidelberg also took on some charging station technology from the power company EnBW, thereby expanding its charging network for public users. This transaction and the cooperation with SAP mark the next strategic step in the e-mobility business model.

The sale of the customer headquarters in Brentford, UK, to the developer Fairview New Homes Ltd., which was announced in the middle of June 2021, went ahead as planned in the final quarter of the 2021 calendar year. The transaction, which had an agreed mid-eight-figure purchase price, resulted in income of around € 26 million. As per the agreement, the majority of the purchase price will not be paid until the 2022 / 2023 financial year.

Following the sale of around 130,000 m² of space at the Wiesloch-Walldorf site at the end of the first quarter of the 2021 / 2022 financial year, a further area of around 80,000 m² was sold to the same investor at the end of the 2021 calendar year in conjunction with location and structural optimization. The purchase price for the second tranche was in the mid-eight figures; the transaction is due to close in the 2022 / 2023 financial year. The consolidation of the production site will lead to a sustainable reduction in Heidelberg's future operating costs. The buyer, the VGP Group based in Antwerp, Belgium, is planning to establish an innovative and architecturally sophisticated production, office and technology area in the Rhine-Neckar metropolitan region in close cooperation with Heidelberg. This area will then be part of the industrial park initiated and operated by Heidelberg at the Wiesloch-Walldorf site.

Changes in the Management Board

On October 28, 2021, the Supervisory Board of Heidelberger Druckmaschinen AG appointed Dr. Ludwin Monz as the new CEO to succeed Rainer Hundsdörfer, who is retiring on account of his age, effective April 1, 2022. Also, the contract with CFO Marcus A. Wassenberg was extended until 2027 as scheduled in December. These decisions ensure Heidel- berg's continuity in the financial stability it has achieved and the ongoing development of the strategic reorganization it has instigated.

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Heidelberger Druckmaschinen AG published this content on 09 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 February 2022 06:07:08 UTC.