Heidelberg Expects Strong Second Half of Year

Thanks to a high order backlog of €953 million, Heidelberg anticipates that the second half of the financial year 2024-2025 will be strong, while current developments over the quarters reflect the pronounced seasonality that is to be expected.

This positive outlook is based on strong incoming orders in the first half of the year, which are 7.4% up on the previous year, at €1.273 billion. Sales of € 915 million were within expectations, due to purchasing restraint ahead of the drupa tradeshow.

“Heidelberg is starting a very strong second half of the year. We are now ramping up the utilization of our production capacities so we can work through our order backlog in the third and fourth quarters quickly and profitably,” says Heidelberg CEO Jürgen Otto. “The forecast sales volume for new machines has already been almost entirely met with orders and our production operations are running at full capacity. We can be confident that we will achieve our targets for the year.”

Heidelberg is still particularly strong in and around China. Incoming orders in the Asia Pacific region recorded the clearest growth in the first six months of the current financial year, increasing by approximately 10%.

Based on strong order levels, the company anticipates a clear increase in sales in the second half of the current financial year, in particular. When adjusted for special items, the EBITDA margin in the first six months of financial year 2024-2025 was 3.4% (same period of previous year: 9.2%) and was impacted in particular by lower sales in Q1 and by expenses related to drupa.

Strict cost discipline had a positive impact in the reporting period. This is another reason why EBITDA improved significantly compared to the first quarter from €-9 million to €40 million. During the period under review, there were no special items that require adjustment. Compared to the same period of the previous year (€33 million), the result after taxes after six months dropped in line with the lower adjusted EBITDA to €-35 million. In the second quarter, the result after taxes was positive, at €7 million (same quarter of previous year: €23 million).

After the first half-year, free cash flow was, as anticipated, €-102 million (same period of previous year: €-28 million). It improved significantly in the second quarter, creeping into positive figures, at €2 million. “Our active cost management is increasingly bearing fruit by considerably improving free cashflow over the course of the year,” reports Heidelberg CFO Tania von der Goltz. “Consistent cost control over the coming months will play a big part in the success of the current financial year. Furthermore, the anticipated improvements in results in the second half of the year will have a positive impact on the free cash flow.”

Compared to the same period of the previous year, the packaging solutions segment was able to increase incoming orders in the first half of the year by around 9.7% to € 675 million, thereby contributing approximately 53% to the total volume. Megatrends in the packaging market are first and foremost the growing demand for packaging that is both sustainable and high quality.

Beyond the packaging business, Heidelberg wants to capitalize on other strengths. The company is characterized by a high export ratio, as over 80% of its business is generated outside of Germany. In particular, the company sees further growth opportunities in China and the Asia-Pacific region thanks to local production and a very strong market position.
Beyond Asia, Heidelberg benefits globally in the service business from a large installed base of machines that are connected to Heidelberg via a cloud. Networking allows the efficiency of the systems to be improved, preventive maintenance to be planned and software updates to be installed.

Taking into account the expectations and assumptions published and presented in the 2023-2024 management report, the company continues to expect sales for financial year 2024-2025 to be in line with the previous year’s figure (previous year: €2,395 million).  In the future, the focus will primarily be on strategic growth measures in the packaging, industry and service segments, as well as further cost reductions.