Thanks to strong demand in North America and Europe, and together with sustained growth in the packaging segment, Heidelberger Druckmaschinen AG (Heidelberg) is on track after surpassing nine months of the current fiscal year 2022/23. In the third quarter that has just ended (October to December 2022), the Group broke the general trend in the mechanical engineering industry by registering a stable order intake of 630 million euros, which meant an order book of almost 1,000 million euros. With 609 million euros, sales in the third quarter were about 5% more than the equivalent quarter of the previous year.
Adjusted for non-recurring effects, EBITDA was 18 million euros higher than the previous year, mainly due to the positive impact of increased sales. However, the accounting for the collectively agreed inflation relief bonus had a detrimental effect during this accounting period. The production-related increase in inventories resulted in a free cash flow of -4 million euros in the third quarter, which represented a stable evolution compared to the corresponding quarter of the previous year. Thanks to the good performance in terms of sales and order intake and the significant improvement in the operating result, the company confirms its forecast for the 2022/23 financial year as a whole. “We had a positive third quarter and were able to further increase our sales and operating results. Looking ahead, the coming months will continue to be affected by the expected increases in material, energy and personnel costs,” commented Ludwin Monz, managing director of Heidelberger Druckmaschinen AG. “We will continue to counter this by increasing prices and maintaining our cost discipline. We are confident of achieving our goals for the year”” he added.
Incoming orders after nine months remained stable and at a high level compared to the previous year. Despite the economic uncertainties, they amounted to 1,859 million euros (previous year’s figure: 1,888 million euros). At the balance sheet date, the order book amounted to almost 1,000 million euros, which lays a good foundation for the next financial year. Sales in the three quarters of the current fiscal year exceeded the respective figures of the previous year. With 1,729 million euros, the total for these nine months was 10% higher than the previous year (1,565 million euros).
The positive operating performance also continued in the third quarter, but was negatively affected by the non-recurring effect of the publication of the fully agreed inflation relief bond. Adjusted for non-recurring effects in the current and previous financial years, EBITDA after nine months was around 56 million euros higher than in the previous year. In the third quarter, the operating result improved by 18 million euros compared to the previous year. The non-recurring effects of the recognition of the collectively agreed inflation bonus on the balance sheet liabilities (Q3: -15 million euros), the sale of a property in Switzerland (Q1: +12 million euros) and the investment in the joint business with Masterwork (Q3: € +7 million), largely cancelled each other out.
The non-recurring revenues included in the equivalent period of the previous year (EBITDA: 132 million euros) of around 48 million euros (Q2 of the previous year: +22 million euros from the sale of Docufy GmbH, Q3: +26 million euros from the sale of the Brentford property in the UK) was more than offset by the improvement in operating performance. After three quarters, EBITDA amounted to 144 million euros (previous year: 132 million euros), corresponding to an EBITDA margin of 8.3%. The net profit after taxes after these nine months also increased significantly, amounting to 54 million euros (equivalent period of the previous year: 40 million euros).
Packaging printing exhibited particularly strong growth in the third quarter. Incoming orders from October to the end of December 2022 were 18% more than the previous year’s figure. During the nine-month period, order intake improved by 5% compared to the same period of the previous year. With 812 million euros, sales after nine months were 22% higher than the previous year. In commercial printing, sales amounted to 898 million euros, while incoming orders fell slightly. As in the first half of the year, changes in Germany’s incentive policy for e-mobility meant that the Wallbox business could not continue the exceptional growth of the previous year, in terms of incoming orders and sales.
Low net financial debt: the equity index continues to rise
After nine months, free cash flow amounted to 16 million euros (previous year: 69 million euros). This lower figure is mainly due to the usual increase in inventories related to production and effects associated with the supply of spare parts. As expected, the income from the sale of assets in the period analyzed in this report also fell in relation to the previous year. Due to the negative free cash flow, the net financial debt at the end of the third quarter was 26 million euros and therefore remained at a low level (previous year: 6 million euros). Heidelberg is making progress with its equity index, which rose to around 21%.
“A low net financial debt and a higher capital ratio put Heidelberg in a good financial position”” commented the company’s new CFO, Tania von der Goltz. “In view of the uncertain situation at present, we will continue to work on our resilience, and we will be attentive to our costs,” he added.
Heidelberg maintains its forecast for the 2022/23 fiscal year. The company continues to expect sales figures to increase to around 2,300 million euros (2021/22: 2,180 million euros). Despite the likelihood of cost increases, profitability will continue to improve. Heidelberg forecasts a further increase in the EBITDA margin of up to 8% for this year (2021/22: 7.3%). The net result after taxes is also expected to improve slightly compared to 2021/22 (33 million euros).