HEIDELBERG SETS STRATEGY FOR FUTURE

The world’s biggest press manufacturer, Heidelberg, has outlined a new dual-track strategy, which includes an expansion of its printing portfolio, particularly in packaging and digital, and unlocking new unrelated markets.

The company presented its new strategy as it revealed its year-end figures, which showed it exceeded targets, in what it said was a "challenging" year, and said it is launching a value creation programme.

The new business strategy will lay the foundation for future investments. Under the new dual-track strategy, Heidelberg is pursuing two key strategic approaches. Firstly, the company is looking to make an impression on the printing market beyond its business with sheetfed offset presses, especially in the packaging market and digital printing. And, secondly, as it has already done with its wallbox business for electric car charging, Heidelberg will be unlocking new markets alongside its core business.

Its strategy for printing includes investing in its packaging operations, which now account for half the company’s revenue, and “going digital in commercial printing”. Heidelberg did have a B1 inkjet digital press, the Primefire, but pulled out of the project three years ago, saying it was ahead of its time. It intends to self-fund its investments in its growth from its free cash flow.

Heidelberg CEO Dr Ludwin Monz said, “Faced with further cost increases and a level of profitability that remains low, Heidelberg is initiating a value creation programme. The aim is to further boost the company’s financial strength, and step-up investments in growth areas.”

Sales for the year rose by 11.5 per cent to €2.44bn, slightly ahead of its target of €2.3bn, and up by 12 per cent on the previous year. EBITDA likewise was ahead of target, at 8.6 per cent against 8 per cent. Net profit almost trebled to €91m, up from the prior year’s figure of €33m.

Incoming orders dipped slightly by one per cent, while the order backlog reduced by six per cent to €848m from €901m the previous year.

As the global demand for packaged goods continues to increase, packaging and label printing is enjoying particular growth, making it an important core segment for Heidelberg. The Packaging Solutions segment already accounts for around half of the company’s sales. This proportion has gradually increased in recent years, a development to which its innovations have also contributed.

These innovations include the new generation of Speedmaster XL 106 sheetfed offset presses, enabling folding carton manufacturers, in particular, to increase their net output by up to 10 per cent. The Boardmaster flexographic web printing system, a completely new development, doubles the productivity of price-sensitive folding carton printing compared to the predecessor model.

Heidelberg intends to use this technology to support its strategy and growth. In line with its dual-track strategy, it is also focusing on growth in digital printing – a segment that is enjoying the strongest growth in the label market, with a rate of around six per cent. The company is looking to build on its position in this market with Gallus One, which it says is the first fully digital and highly automated label printing system. Gallus is about to celebrate its centenary, next week, by opening a new Customer Experience Centre in Switzerland.

Thanks to its charging solutions for electric cars, Heidelberg has successfully positioned itself in the growth market of domestic electric mobility in Germany through its subsidiary Amperfield. To reach a larger customer base in the future, the company is further driving its expansion into other European countries. A wallbox with a solar function is also being added to the product portfolio to benefit from the growing number of domestic photovoltaic installations.

Heidelberg said its costs would increase in the coming year, particularly energy costs, which meant it would be forced to raise prices on its products. It forecast its EBITDA would go to 7.2 per cent for the new year as a result, on sales that would remain at the same €2.44bn level as this year.

Heidelberg will look to raise the funds for its growth strategy from within itself. To deliver innovation and, in particular, the associated growth, Heidelberg requires the necessary resources – whether to further strengthen its product portfolio in the growing packaging sector or to fund a development budget for the successful expansion of digital printing. With this in mind, the company is looking to significantly increase its free cash flow in the medium term. “We will provide and redistribute the resources for growth through our own internal efforts so as to successfully implement our growth strategy,” explained Heidelberg CFO Tania von der Goltz.