Heidelberger Druckmaschinen : Interim Statement 2021/22 First Quarter (533 KB)

Interim statement

Q1 2021/2022

PERSPECTIVES

Heidelberg Group

INTERIM STATEMENT FOR THE FIRST QUARTER OF 2021 / 2022

Figures

• High investment activity - incoming orders higher than before the COVID-19 crisis at € 652 million
• 39 percent increase in order backlog as of June 30 compared to previous year provides strong foundations for achieving full-year targets
• Sales rise to € 441 million thanks to improved order backlog at start of financial year
• Operating earnings strength improves with EBITDA of € 15 million
• Result after taxes at € - 14 million
• Free cash flow clearly positive at € 29 million
• Net debt falls to € 41 million, leverage remains with 1.7 at low level
• Forecast for financial year 2021 / 2022 unchanged

Facts

• Broad-basedrecovery in almost all markets
• Heidelberg launches international innovation initiative for the global printing industry
• Successful China Print both on-site and online - world premiere of the new Speedmaster CX 104
• Production in Shanghai to be expanded in response to strong utilization
• Heidelberg Digital Unit named one of Germany's top digital labs for the third time
• Booming Wallbox business spun off to form dedicated company
• Annual General Meeting successfully held virtually - all items on the agenda approved

Note

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

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General information regarding this report

The Company has reported the key earnings figures of EBIT and EBITDA including restructuring result since April 1, 2021. The prior-yearfigures 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 result- ing from the new operating model introduced as part of its reorientation. Reporting in the three segments Print Solu- tions, Packaging Solutions and Technology Solutions will allow Heidelberg to manage its business in line with its tar- get markets and the respective customer requirements to an even greater extent than before. The prior-yearfigures have been restated accordingly.

1) Result of operating activities before interest and taxes and before depreciation and amortization

2) Net total of financial liabilities and cash and cash equivalents and current securities

3) Ratio of net debt to EBITDA for the last four quarters

Q1

2021/2022

Key figures at a glance

Figures in € millions	Q1
	2020/2021
Incoming orders	346
Order backlog	605

652

840

Interim statement Q1 2021 / 2022

Overall assessment of business development

The business performance of Heidelberger Druck- maschinen AG (Heidelberg) in the first quarter of the financial year 2021 / 2022 (April 1 to June 30, 2021) was characterized by a broad-based market recovery on the back of grow-

Net sales	330
EBITDA 1)	40
in percent of sales	12.1
Result of operating activities
(EBIT)	20
Financial result	- 13
Net result before taxes	6
Net result after taxes	5
Equity	157
Net debt 2)	122
Leverage 3)	- 0.6
Free cash flow	- 63
Earnings per share in €	0.02
Number of employees at end of
quarter (excluding trainees)	11,103

441 ing customer confidence and improved conditions.

15 Incoming orders and sales increased significantly thanks to

3.5 a greater willingness to innovate and invest.

In the first three months of the financial year

- 4	2021 / 2022, Heidelberg further expanded its position as the
- 8
leading digital platform provider for the printing industry
- 12	and made its Zaikio Procurement industry platform freely
- 14	available to all print shops. This enables print shops and

1. their suppliers to digitize and optimize their procurement

1. processes. In turn, this forms the basis for fully automated

1.7 ordering based on various factors, including current paper

29 or ink consumption or stock levels, thereby optimizing the

- 0.05	digital procurement process for both parties. Heidelberg
has also further expanded the digitization of its customer
10,115	relationships in conjunction with useful value-added ser-
	vices and combined all elements of the Heidelberg ecosys-
	tem 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.

In the growth market of e-mobility, Heidelberg showcased its full and expanding portfolio of charging solutions at the digital Hannover Messe trade show in April 2021: the Heidelberg Wallbox Home Eco for quick and easy charging in the private domain, the Heidelberg Wallbox Energy Control with load management for reliably charging multiple networked electric vehicles, and the new Heidelberg Com- box system. The Heidelberg Combox uses a network interface to facilitate and extend remote access to the Heidel- berg Wallbox Energy Control unit and serves as a user- friendly control system in a network comprising up to 16 connected Heidelberg Wallbox Energy Control units. Hei- delberg has established itself as one of Germany's market leaders with its range of Wallboxes for charging in the private and semi-public domains, and it intends to generate further growth by building on its product portfolio, expanding internationally, and extending its sales partner- ships.

In mid-June 2021, Heidelberg optimized its customer approach in the United Kingdom. Having established a new logistics center in Leighton Buzzard in February so that

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Heidelberg Group

customers can be supplied with spare parts and consum­ ables more quickly and flexibly, the Company is now also planning to relocate its customer headquarters to West London before the end of 2021. This will enable all customers to reach Heidelberg's sales and service headquarters, the back office functions and the Company's showroom more conveniently and efficiently in the future. The previous property in Brentford - located between central Lon- don and Heathrow Airport - was sold in June 2021 to the real estate developer Fairview New Homes Ltd. Heidelberg expects the transaction, which has an agreed purchase price in the mid-double-digit million euro range, to take effect in the last quarter of 2021.

In June 2021, the Heidelberg Digital Unit was also honored with a Capital Award as one of Germany's top digital labs in the "core business-related innovation" category for the third time in succession. The award was in recognition of the development of Performance Advisor Technology (PAT), a new component of the Heidelberg Cloud. The technology is based on artificial intelligence (AI). Thanks to big data and a corresponding algorithm, PAT is able to identify major deviations from a standard state that have the potential to negatively affect sheetfed offset press performance.

Starting in late June 2021, Heidelberg launched an international innovation initiative under the motto "It's SHOWTIME!" as part of its efforts to systematically drive the development of innovations for the global printing industry in spite of the continued challenging market con- ditions. During a digital customer event, the Company showcased numerous 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 customers. With this new product, the Company is underlining its strong position in the industry's biggest growth market. 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. In addition to Heidelberg's live presence in Beijing, there was a "digital exhibition" of the booth with a VR 3D exhibition hall on social media, numerous live streams, B2B e-commerce offerings and shows on the Internet. In the process,

more than 25,000 trade visitors interacted with the digital Heidelberg show. The digital exhibition concept enabled all customers to obtain comprehensive information and be involved both on-site and online despite the travel restrictions caused by the pandemic.

The sale of an area of around 130,000 m² at the Wies- loch-Walldorf production site, which was announced in late 2020 as part of the production site and structural optimization program, was completed at the end of the quarter under review. The purchase price was in the mid-double-digit million euro range and was recognized in the quarter under review. The gain on the transaction, which is in the high single-digit million euro range, is offset by dismantling and relocation costs in almost the same amount. The consolidation of the production site will lead to a sustainable reduction in future operating costs.

Net sales and results of operations

Interim consolidated income statement

Figures in € millions	Q1 2020/2021		Q1 2021/2022
Net sales	330		441
Change in finished goods and
work in progress/other own
work capitalized	44		68
Total operating performance	373		510
EBITDA	40		15
Depreciation and amortization		20			19
Result of operating
activities		20			- 4
Financial result		- 13			- 8
Net result before taxes	6			- 12
Taxes on income		2			3
Net result after taxes		5			- 14

• At € 652 million, incoming orders in the first quarter of the financial year 2021 / 2022 were almost 90 percent higher than the prior-year figure of € 346 million. Thanks to a further rise in confidence and a greater willingness to invest, all regions saw substantial growth compared not only with the same period of the previous year, but also with the first quarter of the pre-COVID-19 financial year 2019 / 2020 (€ 615 million).

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Interim statement Q1 2021 / 2022

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As a result, the order backlog increased substantially to € 840 million as of June 30, 2021 (June 30, 2020: € 605 million).

At € 441 million, sales were also higher than the prior- year figure of € 330 million, which was significantly impacted by the lockdowns imposed in response to the pandemic. However, sales remained lower than in the first quarter of the pre-COVID-19 financial year 2019/2020 (€ 502 million).

EBITDA amounted to € 15 million (previous year: € 40 million), while the EBITDA margin was 3.5 percent after 12.1 percent in the same period of the previous year. The prior-year figures were positively affected by income of around € 73 million from the reorganization of Company pension plans for employees in Germany and the need to compensate for reduced employment through the use of short-time work. The increased

sales volume and savings resulting from the transformation of the Company led to an improvement in the operating result in the first quarter of the year under review. The operating result increased compared with the first quarter of the pre-COVID-19 financial year 2019 / 2020 (€ 11 million including restructuring result), even though sales remain lower. EBIT amounted to € - 4 million (previous year: € 20 million).

• The financial result improved to € - 8 million (previous year: € - 13 million), largely as a result of lower financ- ing costs due to the repayment of the corporate bond in September 2020 and the further reduction in finan- cial liabilities.
• Taking income taxes of € 3 million (previous year: € 2 million) into account, the net result after taxes amounted to € - 14 million (previous year: € 5 million).

Net assets

Assets								Equity and liabilities
Figures in € millions		31-Mar-2021		30-Jun-2021	Figures in € millions		31-Mar-2021		30-Jun-2021
Non-current assets	902		874			Equity	109		82
Inventories	542		610			Provisions	1,253		1,242
Trade receivables	246		211			of which: pension
Receivables from								provisions	946		955
sales financing	44		42			Financial liabilities	271		214
Cash and cash equivalents	204		173			Trade payables	146		159
Other assets		231			242			Other equity and liabilities	390		455
Total assets		2,169			2,152			Total equity and liabilities		2,169			2,152

• Non-currentassets declined to € 874 million in the quarter under review. This was primarily due to the reclassification of the property in the United King- dom (Brentford) to other assets (assets held for sale).
• Inventories increased to € 610 million as a result of the high order volume.
• Thanks to systematic inventory and receivables management and higher advance payments on orders, net working capital fell to € 465 million as of June 30, 2021 (June 30, 2020: € 617 million; March 31, 2021: € 505 million).
• Cash and cash equivalents decreased mainly as a result of the repayment of financial liabilities.

• Equity declined to € 82 million at the end of the quar- ter. This was primarily due to the lowering of interest rates for pensions in Germany (from 1.4 percent as of March 31, 2021 to 1.3 percent as of June 30, 2021) and the net loss for the period. The equity ratio was thus around 4 percent.
• The lower interest rate for German pensions meant that pension provisions increased slightly as of June 30, 2021. Provisions amounted to € 1,242 million in total (March 31, 2021: € 1,253 million).
• Financial liabilities declined to € 214 million as of the end of the reporting period. Net debt fell to € 41 mil- lion at the reporting date (March 31, 2021: € 67 million; June 30, 2020: € 122 million).
• Leverage amounted to 1.7 as of June 30, 2021 (previous year: - 0.6).

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