Heidelberger Druckmaschinen : Speech manuscript of the Chairman of the Management Board Dr. Ludwin Monz (pre-publication on July 14, 2022, in German) (215 KB)

Speech at the Annual General Meeting of Heidelberger Druckmaschinen AG

Pre-release on 14 July 2022

Wiesloch-Walldorf

Dr. Ludwin Monz

Chief Executive Officer

The spoken word counts!

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Welcome

Dear Shareholders, Ladies and Gentlemen,

Welcome to this year's Annual General Meeting of Heidelberger Druckmaschinen AG, which unfortunately has to be held virtually for the third time in succession.

I would now like to take you on a journey through my first three and a half months at HEIDELBERG and describe my view of our company. In countless conversations with managers, employees and partners, in visits to the company's most important locations and, above all, in several meetings with customers, I have gained a picture of what HEIDELBERG is all about, how HEIDELBERG is perceived by its most important stakeholders and what potential the company has.

Ladies and gentlemen, I am certain: HEIDELBERG is one of the leading mechanical engineering companies in Germany and has know-how that is as broad as it is deep, and thus has great potential both in the core business of printing and in related areas. We are supported by highly loyal customers who have witnessed how HEIDELBERG, with its tradition of more than 170 years, has repeatedly shaped the printing industry with new technologies and products.

The HEIDELBERG brand is well known and stands for innovation, excellence, top performance and quality in mechanical engineering - both in hardware and in electronics and software.

A strong brand

This is certainly not often the case in Germany.

Our products inspire with their performance, functionality that is perfectly tailored to customer needs and with tailor-made, innovative as well as creative solutions to the challenges faced by printers.

But this alone is no longer enough today, given the dramatic and dynamic changes in our customers' environment. The competitive pressure on print shops is increasing, they are suffering from the high cost of materials, and recruiting staff presents them with enormous challenges.

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The change in the printing industry was initiated by digitalization. That is why HEIDELBERG has been working very intensively on software solutions, digital printing processes and new business models in recent years. In this way, we can address the aforementioned challenges of our customers. A good example of this is consistent and simplified processes in the pressroom. The highly automated control and simple operation of the machines simplifies the complex production process and makes it more productive.

The software not only assists and optimizes the production process, but also simplifies the commercial level. It creates transparency about the profitability of the print shop, integrates the print shop's customers into the processes and provides support for administrative processes that would otherwise have to be carried out manually.

Today, our customers buy much more than just a press. They gain access to a value-added ecosystem: a global and fast service, a comprehensive range of consumables, and easy-to-use digital and data-based services. We can do this because a multitude of sensors in each of the approximately 13,000 installed machines provide several million data points every day. From this wealth of experience, we learn how we can further optimize our products and services for the success of our customers.

Ladies and gentlemen,

So much for my first look at our company. I am pleased that my start at HEIDELBERG coincided with the announcement of an operationally very successful financial year. Our company has successfully mastered the phase of economic recovery and the restoration of stability.

A great deal has also already been done in terms of the strategic and content-related realignment of the company. And yet we are still at the beginning here. By focusing on our profitable core business, however, we now have the financial and balance sheet resources to continue developing the content of our company.

In the meantime, the capital market has very clearly rewarded HEIDELBERG's economic recovery, but also the success of the still quite young business field of electromobility, with a multiplication of the share price. This led to the company's return to the SDAX in December 2021 after an absence of more than one year. However, the general economic conditions have changed significantly in the meantime. In particular, we are feeling the economic consequences

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of the war between Russia and Ukraine. This is making itself felt on the capital markets across almost all sectors and is thus not only affecting HEIDELBERG. For example, the DAX sub-index for industrial machinery manufacturers has fallen by over 40 percent since the beginning of the year.

Ladies and gentlemen,

I would now like to present to you the key financials of our past financial year 2021/22, which ended on March 31, 2022. It was a successful year with significant operational progress and the renewed reporting of a substantial net result after taxes and a noticeable strengthening of balance sheet resilience.

Financial year 2021/22 at a glance: Significant recovery compared to previous year

While the previous year 2020/21 was still heavily impacted by the Covid 19 pandemic, the markets recovered noticeably in 2021/22. We also benefited from this. Order intake increased significantly by 23% to €2.45 billion and sales by 14% to €2.18 billion. The different growth rates of these key figures are primarily attributable to the strong market recovery at the beginning of last year, which was only reflected in rising sales revenues with a time lag over the course of the year due to the usual delivery times.

Our earnings also developed very positively. The EBITDA margin was improved by 230 basis points to 7.3%. This is truly remarkable against the backdrop of the in part massive increases in the cost of materials as well as the full write-downs of all our Russian assets. The increase is due to the successful reduction of structural costs as well as the significantly higher sales volume. At the same time, non-operating income, which was still intended to compensate for the corona-related underutilization of capacity in the previous year, was already significantly reduced in the year under review and replaced by operating income. The operational improvement in EBITDA amounted to more than € 150 million in the past financial year. We were also able to report a significant increase in net result after taxes, which amounted to € 33 million. The improvements in the financial result also had a positive impact here, which was due to the massive reduction in debt.

High order backlog forms good foundation for new financial year.

As a consequence of the strong order intake, the development of our order backlog at the end of the financial year was particularly pleasing. This is an important indicator for the new financial

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year. At around €900 million, we achieved the highest level in the last ten years, €260 million more than a year earlier. This means that the ratio of orders on hand to expected sales is also at a record high, which makes us cautiously confident for 2022/23. It is also worth noting that the ratio of equipment sales was even higher, meaning that large parts of our production capacity are being utilized well into the financial year.

Order intake and sales increase in all segments

A look at the development of the segments shows that we were able to make substantial gains in both the Print Solutions segment, i. e. commercial printing, and the Packaging Solutions segment. Incoming orders and sales recovered most strongly in commercial printing in the past financial year. However, customers in this segment were also particularly hard hit by the economic consequences of the Covid 19 pandemic in the previous year. By comparison, packaging and label printing is much less susceptible to economic fluctuations, as packaging is needed for the basic supply of food and pharmaceuticals. This can be seen, for example, in the consistently high volume of printing by customers in this segment during the pandemic. A change in consumer behavior also had a positive impact on the Packaging Solutions segment. Accordingly, there was increased demand for sustainable and paper-based packaging. Overall, the Packaging Solutions segment also recorded a significant increase in key figures compared to the previous year.

Both segments benefited equally from a strong increase in new press business in the past financial year, which was partly due to the successful market launch of the new Speedmaster CX 104 universal press. In regional terms, almost all regions in both segments recorded growth, with the largest contribution coming from Central Europe and Asia.

The development in our dynamically growing area of electromobility was outstanding. This is reflected in the performance of the Technology Solutions segment. Here, sales of charging stations for electric vehicles, known as wallboxes, increased by more than 120% to around €50 million in the past financial year. This growth is purely organic and does not yet include the activities acquired from EnBW. In view of the restrictions in the supply chains that were also felt in this business, growth was actually slowed down and would actually have been even higher. This is also weighing on us in the new financial year; we will therefore probably not see the growth rate from the previous year in this financial year. Unlike other market players, our

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