Heidelberg to cut 2,000 jobs in efficiency drive

The management board of Heidelberg has agreed on the Focus 2012 efficiency program to achieve the company's profitability targets, which will result in 2,000 job losses worldwide.
 
Heidelberg said the aim of Focus 2012 is to ensure that the target operating result before special items of around €150 million is still achieved in financial year 2013/14 and the company can ‘independently continue to build on its leading position in the future’.
 
This will be achieved by working to significantly reduce capacities and costs at Heidelberg over the next two years. This will lay the foundation for positive business developments in response to the volatile environment and changing market requirements, Heidelberg said.
 
Among the short-term measures, production capacities will be reduced by around 15 percent and service capacities in the regions will be adapted in line with the expected medium-term level of sales. Research and development expenditures will be cut by reducing capacities, further optimizing internal R&D processes, and reprioritizing projects.
 
Sales, marketing and structural costs will also be reduced substantially by pooling sales and marketing activities and restructuring individual markets.
 
Most of the measures will be initiated and implemented quickly before the end of calendar year 2012. In addition, the program includes a number of medium- to long-term measures aimed at adapting the entire organization to the changed structures.
 
The entire package of measures will have an impact on the global headcount of Heidelberg. Subject to talks with employee representatives, up to 2,000 jobs will be cut worldwide. Based on current plans, around 1,200 production, development, administrative, sales and marketing jobs in Germany and around 800 jobs outside Germany will go. At December 31, 2011, Heidelberg had 15,666 employees worldwide.
 
Comprehensive support for the global customer base will still be ensured, Heidelberg stressed.
 
The target is to achieve total sustainable savings of around €180 million in financial year 2013/14. Depending on the results of negotiations with employee representatives and other factors, the non-recurring expenditure required to do so is estimated at up to € 150 million.
 
Heidelberg chief executive officer Bernhard Schreier (pictured, above) said: ‘The ongoing economic uncertainties will continue to put a brake on the industry's recovery. We are seeing weaker demand in industrialized nations but stronger growth potential in emerging markets.
 
‘Focus 2012 will position Heidelberg accordingly, above all by significantly reducing production capacities and by adjusting sales activities to the regional market changes. This will create the basis and efficient structures needed for profitable business development.’
 
The confirmation of the Focus 2012 program comes as Heidelberg released its preliminary third quarter results, covering the period from October 1 to December 31, 2011.
 
Heidelberg said economic uncertainties have made the industry more reluctant to invest and resulted in weaker demand, adding that the interim insolvency of a competitor (manroland AG) is exacerbating this situation.
 
Based on preliminary calculations, incoming orders in the third quarter of financial year 2011/12 totaled around €640 million and sales around €630 million, which is in line with scaled-down expectations. Preliminary incoming orders at Heidelberg are down on the previous quarter's figure of €668 million, while preliminary sales match the figure for the previous quarter (€636 million).
 
The third quarter's preliminary operating result excluding special items is just in the black again at around €2 million (previous quarter, €5 million). After nine months, despite sales falling slightly compared to the previous year, Heidelberg has succeeded in improving the operating result excluding special items to a loss of €19 million (previous year, €26 million loss). As a result, the company is still planning to achieve a noticeably better operating result excluding special items for financial year 2011/12 as a whole than in the previous year.

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