Heidelberger Druckmaschinen (Heidelberg) has adopted a wide-ranging action package for a short-term reduction in structural costs and long-term improvements in the company’s profitability.
‘Heidelberg’s realignment is a radical step for our company that also involves some painful changes. As hard as it was for us to make this decision, it is necessary in order to put our company back on track for success. Discontinuing unprofitable products enables us to focus on our strong, profitable core,’ said Rainer Hundsdörfer, CEO of Heidelberg. ’This is where we will further extend Heidelberg’s leading market position by leveraging the opportunities of digitalization. Going forward, we will continue to provide our customers worldwide with technologically leading digital solutions and services across the board.’
Heidelberg is improving its liquidity with a return transfer of part of the liquidity reserves in the amount of approximately EUR 375 million from the trust fund managed by Heidelberg Pension-Trust. In this way, the company plans to improve its financing structure by reducing debt, notably including the repurchase of a EUR 150 million high-yield bond, and to systematically press ahead with its realignment.
‘This marks a milestone for Heidelberg. At a single stroke, we are freeing ourselves from the severe debt burden and, at the same time, can systematically implement the requisite operational realignment within the next 18 months,’ commented Marcus Wassenberg, Heidelberg’s chief financial officer. ‘This will make us crisis-proof in the short term and significantly improve profitability so that we can press ahead with our digital realignment. We are pleased that this financial plan of action has the support of the employee representatives and the trade union as well as all the lending banks.’
Heidelberg will discontinue individual products that earn too little and significantly impact the company’s profitability with an annual loss totaling some EUR 50 million. In digital printing, for example, the market for the Primefire 106 product has grown much more slowly than anticipated because of the difficult industry and market environment. The aim is to focus Heidelberg consistently on profitable activities in order to secure strong operational performance and profitability under its own power.
As has already been announced, the realignment is accompanied by comprehensive streamlining of production costs and structural costs. In total, the planned measures will affect up to 2,000 jobs worldwide. This may also include plant closures. This reduction in force is an essential part of the long-projected action package for Heidelberg’s realignment, quite independently of what is currently a very difficult business situation due to the coronavirus pandemic.